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Why Cooking Gas Is Getting Costlier? | Explained

LPG Gas: Since November, the LPG prices in Delhi have risen by almost 60 per cent or Rs 355 per cylinder. explains why the price of cooking gas is rising and what to expect in future.

Updated: March 25, 2022 1:56 PM IST

By Business Desk | Edited by Raghav Aggarwal

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Commercial LPG Price Hiked By Rs 250 Per Cylinder. Check Latest Rates Here

New Delhi: Liquified Petroleum Gas prices (LPG gas price) were raised by the Oil Marketing Companies (OMCs) by Rs 50 per 14.2 kg per cylinder, for the first time since October. The prices have been raised due to a rise in crude oil prices due to the ongoing Russia Ukraine war. According to a report by The Indian Express, 70 per cent of the household in India use LPG as cooking fuel and around 85 per cent have gas connections. The price rise is expected to have a direct impact on the pockets of the aam aadmi.

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At a time when India is coming out of the economic slump due to Covid-inflicted lockdowns, the rise in cooking gas prices may have a negative impact on consumer sentiment. But why have the prices been hiked? Let us take a deep dive.

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Hike In Global Oil Prices

According to IE, the LPG and PNG prices in India are benchmarked to the international crude oil prices. So, an increase in oil prices is bound to have an impact on the prices of cooking gas. Since November 2020, oil prices have jumped almost $80 per barrel from $41 to $115 on Thursday. As a result, Saudi Aramco, one of the biggest oil suppliers has hiked the price of LPG from $729 to $769.1. In November, this price was $376.3 per metric ton, the report added.

With this, the LPG prices in Delhi have risen by almost 60 per cent or Rs 355 per cylinder. According to reports by Moody’s, India’s top oil retailers including Indian Oil (IOC), HPCL and BPCL have lost a whopping Rs 19,000 crores between November and March. To cut the losses, the prices of Petrol and Diesel in India are being constantly raised. In the last 4 days, petrol prices have been hiked by Rs 2.5 per litre and Diesel prices have risen by Rs 2.4 per litre.

Not Only LPG But PNG, CNG Also Costlier

The price hike is not only limited to LPG. Indraprastha gas hiked the price of CNG by Rs 1 per kg. The prices of PNG were also hiked by the same amount. These prices, according to Indian Express, may rise further before the changes come into effect on April 1 this year.

The report also stated that even after hiking the price by Rs 50, the under-recoveries of the gas companies are still around Rs 100-125 per cylinder. Signalling that a further price hike may be closer than expected.

Demand Pressure

With the lockdown restrictions gradually being lifted, India will soon be able to move without much restriction. On Wednesday, the Home Ministry revoked the Disaster Management Act after 2 years. This is expected to increase the consumption of oil. It can lead to a further rise in the prices as supply will have to meet the rising demand.

It remains to be seen if the cooking gas prices will go up further or remain under Rs 1,000 in New Delhi. The pocket of the aam aadmi is left in the lurch.

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Published Date: March 25, 2022 10:45 AM IST

Updated Date: March 25, 2022 1:56 PM IST