In the last one year, the prices of domestic cooking gas (LPG) have increased by Rs 219. The main reason for the increase in prices is the huge jump in the prices of crude oil and natural gas in the international market in the recent past. But now the prices of crude oil are softening.
New Delhi. Due to the huge increase in the prices of crude oil, there has been a huge increase in the prices of LPG in the year 2022. On July 5 itself, government gas companies had increased the price of domestic gas cylinders by Rs 50. With this increase, the price of 14.2 kg LPG cylinder in the national capital has gone up to Rs 1,053. Earlier, the price of 14.2 kg domestic gas cylinder was Rs 1,003 in Delhi.
In the last one year, the price of domestic LPG has increased by Rs 219. The main reason for the increase in prices is the huge jump in the prices of crude oil and natural gas in the international market in the recent past. But now the prices of crude oil are softening. On Wednesday, crude oil prices in the international market fell by 2 percent to the lowest level of 12 weeks. On Thursday also, the brand crude futures price fell below $100 a barrel. Similarly, WTI crude futures also fell 0.8 percent to $ 97.74 per barrel.
Will LPG prices come down?
According to a report by the U.S.A., the prices of crude oil have a direct correlation with that of LPG. Sarvendu Bhushan, Senior Group VP at Motilal Oswal, says that due to the Russo-Ukraine war, oil prices reached the sky. Due to this, the price of LPG has also increased in India. As the price of crude oil falls, we can expect a reduction in the price of LPG as well. Suvigya Awasthi of PSL Advocates and Solicitors says that the reason for the increase in LPG prices is the fall of rupee against the dollar and rise in the prices of petroleum gas in the international market. If the price of crude oil falls, then it will also affect the price of LPG. Anushka Arora, founder of ABA Law Office, says that there are many reasons for the increase in the price of LPG. These include a rise in crude oil prices, inflation going to record levels and the Russo-Ukraine war.
This is how the price of LPG is decided
LPG price is calculated on the basis of a formula called Import Parity Price (IPP). From this formula, the rate of crude oil plays a very important role in calculating the LPG price. Various factors like FOB price, ocean freight, insurance, custom duty and port charges are taken into consideration while implementing the IPP formula. India converts all these expenses from dollars to rupees.
That is why the dollar value against the rupee also becomes very important in the pricing of LPG. Apart from these, freight cost, oil company margin, bottling cost, marketing expenses, dealer commission and GST also contribute significantly in determining the price of commercial and domestic LPG cylinders. In other words, after adding all these expenses, the price of an LPG cylinder is decided.
