After the recent increase in the prices of LPG cylinders in the country, the political debate has intensified. The opposition is blaming the economic policies of the government, while the government and energy experts say that the main reason for this is not the domestic policy but the turmoil in the global energy market. In fact, many reasons like rising international prices, war-like situation in West Asia and supply disruptions have affected LPG prices in India.
Domestic cylinder becomes costlier by ₹60
Recently, the prices of domestic LPG cylinder have been increased by about ₹ 60, while the price of 19 kg commercial cylinder has also increased by about ₹ 115. A 14.2 kg domestic cylinder has now reached around ₹913 in Delhi. This increase has been made after almost a year.
Direct impact of West Asia tension
Experts say that the biggest reason behind this increase is the increasing tension in West Asia. Volatility in the international energy markets has increased due to military activities involving the US, Israel and Iran. This has led to a surge in oil and gas prices, which directly impacts import-dependent countries like India. India imports a major part of its LPG needs and most of this supply comes from Middle East countries. In such a situation, if war or tension increases in the region, the supply chain gets affected and prices increase.
Strait of Hormuz is also a big reason
According to energy experts, a large part of LPG coming from West Asia passes through the Strait of Hormuz. It is one of the most sensitive sea routes in the world. Rising tensions in the region increase ship movements, insurance costs and transportation expenses, driving up gas prices.
over-dependence on imports
India is one of the largest LPG consumers in the world. A major part of the total demand in the country is met by imports. When oil and gas prices increase in the international market, it also impacts domestic prices because LPG prices in India are linked to the international market.
Government tried to increase supply
The government has started trying to increase alternative supply of LPG to handle the situation. India is now also increasing gas purchases from countries like America, Norway, Canada and Russia so as to reduce dependence on the Middle East.
Politics vs economic reality
Political allegations and counter-allegations continue regarding the increase in LPG prices. The opposition is calling it a failure of the government’s policies, while experts say that in the current circumstances, the effects of the global energy crisis are visible all over the world.
What could happen next?
If tensions increase further in West Asia or crude oil prices remain high in the international market, there may remain pressure on the prices of other fuels including gas in the coming time. However, the government says that continuous steps are being taken to maintain stable energy supply and reduce the burden on common consumers.
