144 per cent rise in 8 years: Why India has the most expensive LPG
LPG prices in the country have seen a constant rise in last few months. With petrol and diesel prices also skyrocketing, the huge spike in cooking gas rates has put an extra burden on the common man.
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The price of liquefied petroleum gas (LPG) cylinders was hiked for the second time this month on Thursday. While the price of domestic LPG cylinders has been raised by Rs 3.50, the price of commercial LPG cylinders has been increased by Rs 8.
The non-subsidized domestic LPG cylinders now cost over Rs 1,000 in almost all the cities in India. Earlier, on May 7, the price of domestic LPG cylinders was raised by Rs 50.
Based on Purchasing Power Parity (PPP), the LPG per litre price in India is the most expensive compared to any other country in the world, reported TOI.
We take a look at how India became the country with the costliest cooking gas and the second biggest consumer of LPG.
LPG PRICES GO THROUGH THE ROOF
- On March 1, 2014, the price of a cooking a gas cylinder (14.2kg) in Delhi was Rs 410. Now one domestic cylinder will cost Rs 1,003. That is an increase of over 144 per cent in the last eight years.
- From October 2021 to March 2022, there was no change in the rate of domestic LPG cylinders. But once the assembly elections got over in five states, the prices have been increasing continuously, reported the Mint.
- On March 22, the domestic cylinder price was increased by Rs 50. After that, the rates were again raised by Rs 50 on May 7, and then the hike on May 19 by took domestic LPG prices past the 1,000-mark.
- The commercial LPG price was increased by Rs 105 on March 1, Rs 250 on April 1 and Rs 102.50/cylinder on May 1.
WHY THE COOKING GAS IS GETTING COSTLIER
Increase in crude prices, rising inflation and the Russia-Ukraine war have contributed to rising LPG prices.
- Russia accounts for over 24 per cent of the natural gas supply in the world. The ongoing war in Ukraine has made logistics hard to manage and is one of the main reasons behind the steep hike in LPG prices in India, reported Business Today.
- India’s LPG prices are benchmarked to international prices of petroleum gas. Saudi Arabia’s national oil company, Saudi Aramco, has set the price for LPG in March to $769.1 per metric tonne (MT), up by 5.9 per cent from $726.4 per MT in January, and up over 104 per cent from the November 2020 price of $376.3 per MT, reported the Indian Express.
- India’s LPG mix has a 60 per cent share of butane and 40 per cent share of propane. Hence, the prices of these two are considered vital. In March, Aramco set its term contract price at $625 per metric tonne, up by $20 per mt from February. Similarly, butane prices also increased by $10 to $595 per mt in March. This is a 171 per cent increase in propane and a 148 per cent increase in butane prices since May 2020, reported moneycontrol.com.
INDIA BECOMES SECOND LARGEST LPG CONSUMER
- A 2020 study by the Council on Energy, Environment and Water (CEEW), a policy think-tank, said that LPG's share in Indians' primary cooking fuels had increased from 28.5% in 2011 to 71% by March 2020, reported the BBC.
- According to Wood Mackenzie, a global energy consultancy group, India is expected to overtake China as the world's largest cooking gas LPG residential sector market by 2030, reported PTI.
- "LPG demand in the residential sector will continue to see sustainable growth at a cumulative annual growth rate (CAGR) of 3.3%, reaching 34 million tonnes (MT) in 2030 as households' dependence on solid biomass diminishes in the long run supported by rising average household incomes and urban population," the report said.
BURDEN ON COMMON MAN
- With the LPG cooking gas reaching almost every household, the price hikes now are affecting more and more people. People who were given LPG connections under the Pradhan Mantri Ujjwala Yojana (PMUY) are not able to get the cylinders refilled due to the high prices.
- "The biggest reason given by households that owned an LPG connection but stacked it with other cooking fuels was the inability to afford the high recurring expense of refilling their cylinders," Sunil Mani, a programme associate at CEEW told the BBC.
- According to a CEEW report, an average household in rural India set aside 4.9% of its monthly expenditure on procuring cooking fuel in March 2020. By April 2022, this had risen to 11% of the household monthly expense, reported the BBC.