Understanding the LPG Cylinder Price Hike: A Comprehensive Analysis of Rising Costs and Immediate Adjustments
New Year, New Propaganda Expenses. As you are aware, the LPG gas price has hiked over the past few months, leading to increased anxiety among consumers. This article delves into the reasons behind the price hike, focusing on the impact of geopolitical events, changes in crude prices, and the role of oil marketing companies. The analysis aims to provide clarity and insight into the measures taken to address the situation.
The Role of Oil Marketing Companies
The LPG gas price is not determined by the government but is fixed by oil marketing companies. These companies include those who supply to both government and independent LPG connections. The recent hikes in LPG prices are influenced by the cost of crude oil, which has a direct impact on the overall price structure. Given that LPG gas contains 60% butane and 40% propane, the increase in crude prices has resulted in significant hikes across the board.
Economic and Geopolitical Factors
The demand for LPG supply is expected to rise by 34% by 2025, necessitating a reduction in cylinder prices to make LPG a more accessible fuel option. However, the cost of crude prices, coupled with inflation and the Russia-Ukraine war, has caused LPG prices to soar. Russia, which holds about 24% of the world's natural gas supply, is experiencing a significant impact on logistics services due to the war. This has led to an increase in the prices of butane and propane, indirectly affecting the LPG prices in India.
Impact on Private Gas Agencies
The Saudi Arabia-based oil company Aramco has raised the price of butane by 170% and propane by 150%, which directly influences the LPG gas price in India. As India has become the second largest consumer of LPG gas in the world, the number of users has increased rapidly, making the price hikes more noticeable. Private gas agencies are taking steps to provide timely services at a lower cost to compensate for the hike in gas cylinder prices.
Recent Price Adjustments
On June 1, 2022, the rate for LPG cylinders was reduced by Rs. 135. In addition, the prices of commercial 19 kg LPG cylinders in Delhi were reduced by Rs. 198 effective from July 1, 2022, now costing Rs. 2021 instead of the previous Rs. 2219. The price adjustments in other major cities are as follows:
Rs. 182 reduction in Kolkata Rs. 190.50 reduction in Mumbai Rs. 187 reduction in ChennaiThese adjustments reflect the government's efforts to maintain affordability and accessibility of LPG gas for the general population. The impactful changes aim to address the rising costs, ensuring that LPG remains a viable and affordable option for households and businesses.