Data from the PPAC & OMCs indicate that the price of LPG cylinder (both domestic & commercial) has increased significantly since May 2020. Since there are no subsidies except for PMUY beneficiaries, the price rise will affect significant section of the population.
The prices of domestic and commercial LPG cylinders were increased recently, and are effective from 1 March 2023. The price of domestic LPG cylinder is increased by Rs. 50 and in the case of commercial LPG cylinders the hike is Rs. 350. With this increase, the 14.2 Kg Domestic LPG will cost around Rs. 1103 in Delhi while the commercial cylinder’s price is Rs. 2119.50.
This is the second hike in the price of commercial LPG cylinders in 2023, the first one being an increase of Rs. 25.
In the story, we also look at the trends in prices of LPG cylinders, petrol and diesel over the years. Data considered is the price in New Delhi. The prices vary across the country due to transport & other factors in the case of LPG while they vary because of state VAT in the case of petrol & diesel.
Since the beginning of 2021, the price of Domestic LPG cylinder increased 13 times.
Liquified Petroleum Gas (LPG) in India is used for both domestic purpose and commercial purposes. The LPG prices are determined by State-run oil companies – IOCL, BPCL & HPCL based on a host of factors. The respective LPG brands of these oil companies are – Indane Gas, Bharat Gas and HP Gas.
For this analysis, we have considered the price of LPG cylinders in Delhi updated for Indane Gas by IOCL.
As highlighted above, the price of the standard 14.2 Kg domestic LPG cylinder was increased to Rs.1,103 w.e.f for 01 March 2023. The government currently runs the targeted subsidy scheme of Rs. 200 per 14.2 Kg cylinder for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries for up to 12 refills a year for the year 2022-23. No other subsidy or direct benefit transfer of the subsidy money is applicable as of date.
Prior to the recent hike, the price per domestic LPG cylinder was Rs. 1,053, which was effective from 06 July 2022. This increase was in continuation of a series of price hikes which date back to 01 July 2021 when the price was increased from Rs. 809 to Rs. 834.5.
During 01 July 2021 to 01 March 2023, the price was increased 9 successive times. Overall, the increase in price was Rs. 294. Out of these 9 times, the price was increased by Rs. 50 each time on 4 occasions. Prior to this, there price was increased 9 successive times from 01 June 2020 to 01 March 2021. During this period, the price increased from Rs. 581.5 to Rs. 819. In other words, compared to the price on 01 May 2020, the price of a domestic LPG cylinder increased by almost 90%.
In the case of the 19 kg commercial LPG cylinder, there has been a fluctuating trend in price hikes. Over the years, there have been successive price hikes followed by a drop in the price.
If the data of the last few years is considered, there is a considerable increase in the price of commercial LPG cylinders since 01 June 2020.
On 01 June 2020, the price increased to Rs. 1139.5 per LPG cylinder from the earlier Rs.1029.5. It was followed by an immediate drop in price. However, during the three-year period since, the price increased 20 times. The greatest increase in price was the most recent one, wherein it increased by Rs. 350.5 per cylinder. In the case of commercial LPG cylinders, the price has increased by more than 100% compared to 01 May 2020.
After continuous increase in March/April 2022, price of petrol now lower & stable
The price of international crude oil has a significant impact on fuel prices in India i.e., prices of Petrol & Diesel, as India imports crude oil to meet most of its domestic requirements. Though government technically has no role in fixing the retail selling price of petrol & diesel as both are de-regulated, it is common knowledge that government tries to balance the impact of a steep rise in price through taxation changes or other means.
For this analysis, data from Petroleum Planning and Analysis Cell (PPAC) is considered. The prices vary across the country as state taxes vary from one state to another. We have considered the prices in Delhi for analysis. Comprehensive data on the Prices of Petrol & Diesel can be found at Factly’s Dataful.
The most recent price hike on petrol was on 06 April 2022, when the price of petrol in Delhi increased to Rs. 105.41. Since then, there has been no increase in the price of Petrol. This was a culmination of a 16-day period of everyday increase in price starting 22 March 2022. Except for 2 days in between, there was an increase in price every day from 22 March 2022 to 06 April 2022. While it is not the longest successive streak of daily price increase, it is the highest in terms of value, at least since January 2018. During this period, the price of Petrol increased by Rs. 10. Prior to this period, there was another extended period starting from 27 September 2021 to 02 November’2021, when there was an almost every day increase in the price.
The price decreased in May 2022 after the government reduced excise duty both on petrol & diesel. The price has remained constant after this decrease. Factly’s analysis on correlation between the price hike of fuel and Elections in the country can be read here.
Increasing trend in price of Diesel more prominent since November 2020
Analysis of trends of the daily price of diesel since 01 January 2018 indicates multiple distinct phases. For the first 10 months of 2018, there was a largely increasing trend in diesel prices. During this period, the price of Diesel in Delhi increased from Rs. 59.5 per litre to Rs. 75.6 per litre. This was followed by a period of alternating decline in diesel prices and a comparatively stable period up until April 2020.
During the next three months, the price of diesel per litre jumped from Rs. 62.3 to around Rs. 82 per litre. This period coincided with the COVID-19 pandemic across the world when the supply of international crude was affected contributing towards an increase in crude oil prices.
With the easing of the first wave of the COVID-19 pandemic, the prices fell in subsequent months. However, post-November 2020, there was a more sustained period of price rise. This period lasted nearly a year, with the price of diesel crossing Rs. 98 per litre by November 2021.
As mentioned earlier, the government reduced excise duty on petrol & diesel in May 2022 which reduced the price, and the same has remained stable since.
While the changes in international crude prices have a significant impact on the prices of LPG, Petrol & Diesel, these prices are still affected by government policy, directly in the form of taxes and indirectly by influencing the Oil Marketing Companies (OMCs). The political situations prevailing in the country in terms of elections & inflation, revenues of the government, the burden on the public, etc. are a few of the various factors that have a bearing on the prices.