Cooking gas, commercial LPG to cost more, jet fuel less

Oil marketing companies (OMCs) on Wednesday raised prices of both domestic and commercial LPG cylinders, while that of jet fuel received a cut in a move that could help lower air fares.

The price of non-subsidized 14.2-kg domestic LPG cylinder has been increased by ₹50 to ₹1,103 in the national capital, showed data on the Indian Oil Corp site. The price of the 19-kg commercial LPG cylinder witnessed a steep hike of ₹350.50 to ₹2,119.50 per cylinder.

The hike in domestic cooking gas prices comes after a gap of around seven months post the last revision in July 2022. The price of commercial LPG cylinders which is largely used in restaurant and hotels has been raised twice this year.

With the latest revision, effective 1 March, a 14.2-kg domestic LPG cylinder is priced at ₹1,102.50 in Mumbai, ₹1,129 in Kolkata, and ₹1,118.50 in Chennai.

LPG prices are key elements of a household budget, and an increase in prices may lead to an increase in inflation rate. The country is already under inflationary pressure and the retail inflation is above the 6% upper tolerance limit set by the Reserve Bank of India. The Consumer Price Index (CPI) or retail inflation for January rose to a three-month high at 6.52%, according to data from the Ministry of Statistics & Programme Implementation (MoSPI).

Global energy prices had surged in the aftermath of Russia’s invasion of Ukraine last year. Although, global prices have largely remained elevated, they have eased from multi-year highs.

Amid the rise in global oil and gas prices in the past one year, OMCs have not increased the retail price of domestic cooking gas commensurate with the trend in international prices, leading to heavy losses being incurred by OMCs on the sale of these fuels as they were selling below global prices. In October, the Centre gave a one-time special grant of ₹22,000 crore to the three companies to compensate them for their losses on domestic LPG sales.

However, the OMCs have cut the price of aviation turbine fuel (ATF) by 4%, amid the recent easing of global oil prices owing to a gloomy economic outlook. ATF prices are typically revised on the first of every month based on the average rate of international benchmark and foreign exchange rates. Post the price cut, ATF is priced at ₹1.07 lakh per kilolitre in Delhi, falling from ₹ 1.12 lakh per kilolitre. With the latest cut in jet fuel prices, consumers may witness some relief in air fares as fuel prices account for about 40% of the operating cost of an airline.