Due to the international rates of oil hitting almost negative in the past due to the sudden halt of all global sectors, the price of domestic gas has also hit a new all-time low. The Liquid Petroleum Gas or LPG rates have been slashed for the third time since the pandemic began.
The lockdown that has been imposed resulted in a great decrease in demand for oil which led to the international as well as domestic markets to crash.
“Cutting of subsidized LPG prices”
Non-subsidised LPG or market-priced cooking gas prices were cut by a record Rs 162.50 per the cylinder on Friday, in line with the slump in benchmark international rates.
The non-subsidized LPG which is also often purchased by those who have given up subsidies has been cut for the third time Also, this is the gas that domestic household consumers buy after exhausting their quota of 12 cylinders of 14.2 kg each at subsidized prices.
Benchmark Brent crude oil last month dropped to a two-decade low of USD 15.98 a barrel but has rebounded since to USD 26.43 a barrel on Friday.
Non-subsidized LPG now costs Rs 581.50 per 14.2-kg cylinder in Delhi, down from Rs 744 till Thursday, according to a price notification issued by state-owned oil firms.
This is the steepest reduction in non-subsidized cooking gas prices ever. It beats Rs 150.5 per cylinder cut effected in January 2019.
Also, this is the third straight monthly reduction in price on the back of falling international rates.
The cut comes on the back of Rs 61.50 per cylinder reduction in April and Rs 53 cut in March.
In three reductions, the price of non-subsidized cooking gas has been cut by Rs 277 per 14.2-kg cylinder. It more than negates the massive Rs 144.5 per cylinder hike in rates introduced in February.
State-owned oil marketing companies revise the price of cooking gas on the first day of every month based on average of benchmark fuel in the international market and foreign exchange rate.
Cooking gas is available only at market prices across the country. Eligible users, however, get a subsidy in their bank accounts for buying LPG cylinders at below-market rates.
In Mumbai, the non-subsidised cooking gas price was reduced to Rs 579 per cylinder from Rs 714.50. Domestic LPG users are entitled to buy 12 bottles of 14.2 kg each at subsidized rates in a year. The price of 19-kg LPG cylinders, used by commercial establishment, has been cut to Rs 1,029.50 from Rs 1,285, the notification said.
As people fear the further extension of the lockdown into Phase three of nationwide quarantine, oil and gas prices are expected to fall even further due to limited use during the COVID-19 pandemic which has uprooted several countries all over the world.