Fourth hike this year, LPG to now cost Rs 1,053 per cylinder

Cooking gas LPG is getting more expensive as it now costs Rs 1053 per cylinder (not subsidized) in Delhi yet 50 rupees high On Wednesday by state-owned fuel dealers.

The rise, the third since May and the fourth this year, comes amid inflation still above six per cent – the minimum for the Reserve Bank of India (RBI) – for several months, driving up the prices of food, fuel and other basic commodities.

A cooking gas cylinder is priced at Rs 1,052.50 per 14.2 kg cylinder in Mumbai, Rs 1,079 in Chennai and Rs 1,068.50 in Kolkata respectively as rates vary across states due to differences in value-added tax (VAT).

walking long distances

State-owned refineries have raised cooking gas prices 13 times since 2021. According to official data from the Indian Oil Corporation (IOC), cooking gas rates were Rs 694 per cylinder before the Rs 25 hike on February 4, 2021.

Prices were raised by Rs 50, Rs 25, Rs 25, Rs 10 and Rs 25.50 on 15 and 25 February, 1 March and 1 April respectively last year, bringing the LPG cylinder rate to 834 rupees in June 2021.

Cooking gas will cost Rs 899.50 by the end of 2021 after a price hike of Rs 25.50 on 1 July, 25 rupees on 17 August, 25 rupees on 1 September and 15 rupees on 6 October.

The LPG price reached Rs 1,053 after rising Rs 50 on March 22, Rs 50 on May 7, Rs 4.50 on May 19 and Rs 50 today.

Pricing

Since India depends on importing oil, the cost of importing, according to official data, more than 16 million tons of LPG in exchange for a consumption of more than 27.41 million tons, depends on world prices, which are determined by the giant Saudi oil company Aramco.

Other components of pricing are shipping cost, customs fees, port fees, and the like. The incessant dollar and rupee dance also makes the domestic market more vulnerable as international trade takes place in US dollars.

Currently, it is a double whammy for India with the rupee trading to an all-time low, nearly Rs 80 against the US dollar and the international price of LPG as high as $725 per metric ton for July. Crude oil is also being sold at higher prices in global markets at Rs 105.85 USD on Wednesday.
Supply chain disruptions, according to analysts, are due to the ongoing Russian-Ukrainian war and heavy sanctions imposed by the West on oil producer Russia among the main reasons for the price hike.

financial support

Earlier, consumers used to buy LPG at non-subsidized or below market prices after exhausting their 12-cylinder quota. But in the middle of 2020, the government stopped paying subsidies on LPG and kept it limited to people below the poverty line (BPL) under the Ujjwala scheme.

It is estimated that more than 70 percent of households use LPG as a primary cooking fuel and 85 percent have LPG connections. Of the 27.76 crore retail consumers, 26.12 crore consumers benefit from the LPG subsidy, according to official data. Higher prices affect household inflation and purchasing power.
Recently the government announced a cut of Rs 8 per liter for petrol and Rs 6 for diesel. A 40 per cent fuel inflation and rising crude oil prices in the international market kept gasoline above Rs 100 in most parts of the country for several months before the cut.

prospects

Chances of a fall in cooking gas prices are bleak unless the government cuts taxes or lowers global prices. To give a respite, the government has so far announced a subsidy of Rs 200 per cylinder but only for the beneficiaries of the Ujjwala scheme.

The Russo-Ukrainian war, which seems to not end even a few months as there has been no armistice between the two sides yet, makes it even more difficult.

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