Bangladesh’s current fuel crisis is being described by parts of the government as a problem of panic buying or syndicates. Those factors exist. But they are secondary. The core of the crisis is supply-side mismanagement, sharpened by delayed price correction.

And the delay matters because it was political, not technical. The BNP government chose in late March to keep domestic fuel prices unchanged for April, even as global energy costs were rising and import conditions were worsening.

When it finally reversed course in mid-April and imposed a steep increase, the damage had already been done: supply distortions had set in, queues had normalized, hoarding had spread, and trust in official assurances had collapsed.

The sequence is clear. On March 31, the government announced that fuel prices would remain unchanged in April. Diesel stayed at 100 takas (about $0.82) per liter, octane 120 takas (about $0.98), petrol 116 takas (about $0.95) and kerosene 112 takas (about $0.92) – despite acknowledged increases in international prices and mounting disruption linked to conflict in the Middle East and pressure on shipping through the Strait of Hormuz.

Even in that same announcement, reports of shortages and long queues were already widespread. Yet the official line remained that there was no supply shortage.

That was a critical error. When a country imports the overwhelming majority of its energy needs, domestic prices cannot remain detached from global costs indefinitely without consequences.

Reuters reported that Bangladesh relies on imports for roughly 95% of its energy needs. Rising crude prices, higher freight and insurance costs, tighter availability and pressure on foreign exchange reserves were already building.

The government had two options: adjust prices gradually and early, or delay and absorb the distortions. It chose to delay. Artificially low prices during a tightening market create predictable incentives.

Consumers top up early. Dealers expect future increases and hold stock. Transport operators queue more often than needed. Informal resellers emerge. Fuel moves away from normal channels toward speculative channels.

This is textbook economics. Once users believe today’s liter is cheaper than tomorrow’s liter, demand is pulled forward. Once traders believe higher prices are imminent, supply is withheld.

That is exactly what Bangladesh is experiencing. Dhaka Tribune reported persistent queues despite repeated assurances that supply was stable. Industry insiders cited supply chain adjustments, price uncertainty and public anxiety.

Fuel station owners complained of irregular delivery schedules and delays in receiving fuel. One station owner said daily deliveries were arriving hours late, making queues “unavoidable.” This is not evidence of a demand-only problem. It is evidence of disrupted last-mile supply.

By the time the government finally raised prices on April 19, the move was large and abrupt: petrol rose from 116 takas (about $0.95) to 135 takas (about $1.11), diesel from 100 takas (about $0.82) to 115 takas (about $0.95), kerosene from 112 takas (about $0.92) to 130 takas (about $1.07) and octane from 120 takas (about $0.98) to 140 takas (about $1.15) per liter.

Reuters described increases of roughly 10% to 15%, citing surging import costs and unsustainable subsidy pressure. But the late correction did not instantly restore order. Queues continued across Dhaka after the hike. Motorists were still waiting hours. A Mirpur queue reportedly stretched nearly one kilometer.

Why did queues persist after prices rose? Because once a supply crisis becomes behavioral, price changes alone do not immediately solve it. The market had already adapted to expectations of scarcity. Hoarding networks had already formed, gray markets were already profitable and public trust had already eroded.

Local newspapers reported that diesel in 16 northern and northwestern districts was being sold 15 to 20 takas (about $0.12 to $0.16) above the official price, while octane in Dhaka was reportedly selling for 250 to 300 takas (about $2.05 to $2.46) per liter in informal channels.

Those margins do not emerge in a well-supplied market. They emerge when official distribution is constrained and arbitrage opportunities are obvious.

The government’s defenders argue that no “real” fuel crisis exists because aggregate stock levels remain adequate. But stock in depots is not the same as supply in the market. A liter sitting in storage does not power a bus in Gabtoli or a ride-share bike in Mirpur. Economics distinguishes between inventory and deliverable supply.

Bangladesh’s problem is not simply whether molecules exist somewhere in the system. It is whether fuel reaches pumps, at predictable intervals, in sufficient quantities and with credible pricing signals. On that test, the system failed.

There is also a credibility problem. The government first insisted there was no shortage and no need for a price increase, then it abruptly imposed one.

That sequence tells consumers two things: first, officials may be understating stress; second, future reversals are possible. Rational consumers respond by buying more whenever they can, further deepening shortages.

Had the BNP government moved in March with a moderate, rules-based adjustment aligned with its own automatic pricing framework, the outcome would likely have been less severe.

Smaller earlier increases could have reduced speculative demand, signaled realism to the market, protected distribution margins and limited the sudden shock of April’s steep hike. Instead, the government tried to postpone the pain politically and paid a higher economic price later.

This pattern is familiar in many economies: delayed corrections convert manageable pressures into crises. Subsidies grow, reserves tighten, importers grow hesitant, and domestic markets grow nervous. Then the eventual correction must be sharper and more disruptive. Bangladesh followed that script.

Even now, blaming syndicates alone misses the point. Syndicates thrive where policy creates rents. Hoarders exploit gaps created by distorted pricing and uncertain distribution.

They are parasites of a failed incentive structure, not the original cause of it. Remove the arbitrage opportunity early through timely pricing and reliable supply, and much of the gray market disappears.

Bangladesh’s fuel crisis was not inevitable at this scale. Global shocks were real, but the transmission was a domestic policy choice — made in March when the government froze prices despite obvious external pressure and compounded in April when the correction came too late to prevent supply chains from straining, hoarding from spreading and confidence from draining out of the market.

So this is fundamentally a supply-side crisis — made worse by behavioral spillovers, yes, but born of delayed decision-making. The shortage at the pump began long before the official price notice arrived.

Faisal Mahmud is a Dhaka-based journalist