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The Impact of Price Increase in Commercial LPG Gas Cylinders
Representational file image. | Photo Credit: E. LAKSHMI NARAYANAN
In a move that is set to impact businesses and consumers, oil marketing companies (OMCs) have announced an increase in the prices of commercial LPG gas cylinders. Effective from November 1, the retail price of the 19 kg commercial LPG gas cylinder in Delhi will see a hike of ₹101, bringing the new rate to ₹1,833 per cylinder, according to official sources.
This price revision follows a previous increase that occurred on October 1, when public sector OMCs raised the price of 19 kg commercial LPG gas cylinders by ₹209. As a result of this adjustment, the updated price in Delhi stands at ₹1,731.50, compared to the previous month’s rate of ₹1,522.50.
Similar increases were observed in other major cities, with Kolkata witnessing a hike to ₹1,839.50, Mumbai to ₹1,684.00, and Chennai to ₹1,898.00 for a 19 kg commercial LPG cylinder. The rise in prices has left business owners, particularly shopkeepers and restaurateurs deeply concerned. Shopkeepers are now urging the government to take measures to control inflation and ease the financial burden on small businesses.
Monthly revisions for both commercial and domestic LPG (liquefied petroleum gas) cylinders occur on the first day of each month, in line with government regulations and market dynamics. In August, OMCs had taken the opposite approach, slashing the prices of commercial LPG cylinders by ₹99.75, offering some relief to businesses and consumers. The increase in commercial LPG gas cylinder prices comes as a challenge for businesses already grappling with inflation, and it emphasizes the need for policy actions to stabilize prices and support small enterprises during these trying times.
ATF price cut 5.8%
Jet fuel or ATF price was cut by almost 6% after four rounds of monthly increases since July.
Aviation turbine fuel (ATF) price was cut by ₹6,854.25, or 5.79%, in the national capital to ₹1,11,344.92 per kl from ₹1,18,199.17, according to a price notification of state-owned fuel retailers.
The price cut comes on the back of four rounds of increases, the last on October 1, when rates were hiked by ₹5,779.84 per kl or 5.1%. Prior to that ATF prices had gone up by the steepest-ever 14.1% (₹13,911.07 per kl) on September 1, and 8.5% or ₹7,728.38 per kl on August 1.
On July 1, the ATF price had gone up by 1.65% or ₹1,476.79 per kl. In four increases, ATF prices have gone up by a record ₹29,391.08 per kl.
Wednesday’s cut in prices of jet fuel, which makes up for 40% of an airline’s operating cost, will ease the burden on already financially strained airlines.
Significance
The increase in prices of commercial LPG gas cylinders has significant implications for businesses and consumers. It directly impacts the operational costs of businesses, particularly small enterprises such as shops and restaurants. Consumers also bear the brunt of these price hikes, as they result in higher prices for various goods and services. Understanding the significance of these price changes helps to evaluate the overall economic impact on different stakeholders.
Features
- Retail price increase of ₹101 for 19 kg commercial LPG gas cylinders in Delhi.
- Similar price hikes observed in other major cities like Kolkata, Mumbai, and Chennai.
- Monthly revisions in LPG cylinder prices as per government regulations and market dynamics.
- Previous price decrease in August provided temporary relief to businesses and consumers.
Objectives
The objectives behind the price increase in commercial LPG gas cylinders can include:
- Improvement of revenue for oil marketing companies.
- Balancing supply and demand dynamics in the LPG market.
- Addressing fluctuating manufacturing and distribution costs.
Effects
The effects of the price increase in commercial LPG gas cylinders are:
- Higher operational costs for businesses, potentially leading to price hikes for consumers.
- Inflationary pressure on small businesses, affecting their profitability and sustainability.
- Financial burden on consumers who rely on LPG for cooking and heating purposes.
Pros and Cons
Pros of the price increase:
- Improved revenue for oil marketing companies, supporting their operations.
- Potential stabilization of the LPG market and supply chain.
Cons of the price increase:
- Negative impact on the profitability of small businesses.
- Increased financial burden on consumers already facing inflationary pressures.
Fun Fact
Jet fuel or aviation turbine fuel (ATF) prices have experienced both significant increases and decreases in recent months. While the price cut mentioned in the article provides relief to financially strained airlines, previous rounds of increases have put additional pressure on their operating costs. The fluctuating prices of ATF reflect the volatility in the aviation industry and its direct correlation with global oil prices.
By analyzing the significance, features, objectives, effects, pros and cons, and including a fun fact, this comprehensive article provides a detailed understanding of the impact of the price increase in commercial LPG gas cylinders.
Mutiple Choice Questions
1. What is the new retail price of a 19 kg commercial LPG gas cylinder in Delhi after the price hike on November 1?
a) ₹1,522.50
b) ₹1,731.50
c) ₹1,839.50
d) ₹1,898.00
Explanation: The retail price of a 19 kg commercial LPG gas cylinder in Delhi after the November 1 price hike is ₹1,833 per cylinder. This is a hike of ₹101 from the previous price of ₹1,731.50.
2. When was the previous increase in the price of 19 kg commercial LPG gas cylinders?
a) November 1
b) October 1
c) September 1
d) August 1
Explanation: The previous increase in the price of 19 kg commercial LPG gas cylinders occurred on October 1. The price was raised by ₹209, bringing the price in Delhi to ₹1,731.50.
3. Which city witnessed a hike in the price of a 19 kg commercial LPG gas cylinder to ₹1,684.00?
a) Delhi
b) Kolkata
c) Mumbai
d) Chennai
Explanation: Mumbai witnessed a hike in the price of a 19 kg commercial LPG gas cylinder to ₹1,684.00. Other cities like Kolkata and Chennai also saw increases in prices.
4. According to the article, why are shopkeepers urging the government to take action?
a) To increase the prices of commercial LPG gas cylinders
b) To control inflation and ease the financial burden on small businesses
c) To decrease the prices of commercial LPG gas cylinders
d) To support large enterprises during trying times
Explanation: Shopkeepers are urging the government to take measures to control inflation and ease the financial burden on small businesses. The rise in prices of commercial LPG gas cylinders has left business owners concerned.
5. What is the purpose of monthly price revisions for both commercial and domestic LPG cylinders?
a) To stabilize prices and support small enterprises
b) To maximize profits for oil marketing companies
c) To create fluctuations in the market
d) To meet government regulations and market dynamics
Explanation: The purpose of monthly price revisions for both commercial and domestic LPG cylinders is to meet government regulations and market dynamics. It allows adjustments based on factors affecting the market.
6. What percentage was the cut in the price of aviation turbine fuel (ATF)?
a) 5.8%
b) 6%
c) 14.1%
d) 8.5%
Explanation: The price of aviation turbine fuel (ATF) was cut by almost 5.8%. This cut comes after four rounds of monthly price increases since July.
7. What percentage of an airline’s operating cost does jet fuel (ATF) make up for?
a) 10%
b) 20%
c) 30%
d) 40%
Explanation: Jet fuel (ATF) makes up for approximately 40% of an airline’s operating cost. The price cut in jet fuel will ease the financial burden on already financially strained airlines.
Brief Summary | UPSC – IAS
Oil marketing companies (OMCs) have announced an increase in the prices of commercial LPG gas cylinders, affecting businesses and consumers. The retail price of a 19 kg commercial LPG gas cylinder in Delhi will see a hike of ₹101, bringing the new rate to ₹1,833 per cylinder. Similar increases were observed in other major cities as well. This rise in prices has left business owners, particularly shopkeepers and restaurateurs, concerned and they are urging the government to take measures to control inflation and ease the financial burden on small businesses. In addition, the price of aviation turbine fuel (ATF) has been cut by almost 6%, providing some relief to financially strained airlines.