At a time when prices of petroleum products have fallen, oil marketing companies have increased prices of commercial liquefied petroleum gas (LPG) by 1.21 per cent in November as global prices of the fuel have gone up ahead of the higher winter demand.
“International LPG prices in October were marginally higher compared with September. Prices of this fuel generally rise as winter approaches,” said a senior official with Indian Oil Corporation, which supplies more than 50 per cent of the country's LPG consumption.
LPG is a combination of butane and propane gases. During winter, the demand for propane, which is used for heating purposes in the US and Europe, increases driving up LPG prices.
IndianOil raised prices of commercial LPG, which is sold in 19-kg cylinders, to Rs 1,108.5 per cylinder on November 1, 2008, from Rs 1,095.24 per cylinder on October 1. Commercial LPG is not subsidised and the oil companies revise their prices in line with international prices on the first of every month.
“Commercial LPG prices are expected to go up in December as well,” said the IndianOil official. However, prices of automobile LPG have come down by around 5.34 per cent on November 1 compared with prices on October 1.
“The oil companies have taken an internal decision to keep auto LPG prices lower than petrol prices in order to make it competitive. It is more of a promotional strategy,” said a Delhi-based analyst tracking the sector. Auto LPG prices on November 1 were revised to Rs 34.38 per litre from Rs 36.32 on October 1.
An economic slowdown across the world has resulted in demand for fuels come down leading to increase in inventories. This has driven down prices of all fuels from petrol to diesel and naphtha.
Prices of petrol and naphtha have gone below that of even crude oil, from which it is produced. However, LPG prices have risen marginally even as crude oil prices have tumbled over 60 per cent in the last four months.