Bhubaneswar: For over 88.8 lakh households in Odisha, who have been using LPG as cooking fuel, the dampening news is they have to shell out more per cylinder from Thursday. The oil marketing companies (OMC) have hiked the price of domestic LPG cylinders by Rs 25 with effect from July 1. The price of commercial cylinder has also been hiked by Rs 84 by the OMCs.
Following the hike, a 14.2 kg domestic cylinder will now cost Rs 861 in State Capital Bhubaneswar. The price from July 1in Bargarh will be Rs 898.50, which is the highest in the State. In Puri – Rs 863, Jharsuguda – Rs 891, Keonjhar – Rs 893 etc.
LPG’s Steamy Show
Though the prices of the cooking gas had maintained a status quo for the last three months (April – June), a glance at the price data shows the prices of the cleaner cooking fuel in the State had posted a significant rise since the beginning of 2021. Check the price-line given below.
• The price of LPG cylinder in January was Rs 720.
• In February, the prices steamed up to touch Rs 795.50 per cylinder.
• In March, the price went up to touch Rs 845.
• From April, due to softening of international prices, the price in the State dropped to rs836 per cylinder.
• May – June: The price remained at Rs 836 only
• From July 1, the price shot up by Rs 25 to touch Rs 861 per cylinder.
Since January this year, the LPG price has increased by Rs 141 per cylinder. A year-on -year (July 2020 to July 2021) comparison shows LPG prices had been jacked up by over 38 per cent. The LPG price in July 2020 was Rs 621 per 14.2 kg cylinder.
Will LPG Prices Melt Down?
Since the hike of Rs 25/cylinder has been based on the June price, there seems to be no respite for the consumers here as the Saudi Aramco has quoted the July price of propane and butane at US $620 per metric tonne, which is nearly 17 per cent up from the quoted price of Rs 530/mt in June.
The prices in May and June remained static due to a dip in international prices. The Saudi Aramco price for propane and butane had been US $ 495/mt and Rs 475/mt, respectively in May. The above solid oil-maths hint at no melt down of LPG prices in coming months. Rather, the price in August will record a rise.
How LPG Price Is Calculated?
Even though the country imports nearly 55 per cent of its LPG requirement, the price of the cooking fuel is determined by IPP (Import Price Parity) model – which means the price of the LPG per metric tonne if imported at Indian ports. Moreover, along with the link to international market, the exchange rate of rupee vis-a-vis US dollar also plays a role in determining the prices of LPG in the country.
The Rupee Trail
The exchange rate of 1 US dollar on July 1 is equal to Rs 74.5. In June, the rate was Rs 74.28 per dollar.
• In May, the exchange rate was Rs 72.9 per dollar.
• In April, one US dollar was Rs 74.8.
• In March, the rate was 72.4 per dollar.
The above trail shows rupee has weakened against dollar. A s a consequence it has an impact on the upward revision of LPG prices. in July. Moreover, forecasts show Rupee will weaken further against US dollar and could touch Rs 78.97per dollar in September 2021.
With the international prices of propane and butane predicted to remain on the higher side, along with little weakening of the rupee against dollar, the LPG prices’ steamy run will continue burning the pockets of consumers here. for a couple of months.