In a significant move impacting businesses and the aviation sector, oil marketing companies have announced a dual revision in fuel prices for the month of July. While commercial cooking gas users face a steep hike, airlines have received some relief with a reduction in jet fuel costs.
Sharp Hike for Commercial LPG Consumers
The price of a 19-kg commercial liquefied petroleum gas (LPG) cylinder has been increased substantially. Effective from July 1, 2024, the rate has been raised by Rs 111 per cylinder in the national capital, Delhi. Following this revision, the new price for a commercial cylinder now stands at Rs 1,813. This hike directly affects restaurants, hotels, canteens, and other enterprises that rely on commercial LPG for their cooking operations.
This price adjustment is in line with the monthly review mechanism followed by state-owned fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL). The rates are revised on the first day of every month, based on a formula linked to international benchmark prices.
Aviation Sector Gets Cost Relief
In contrast to the LPG hike, the aviation industry has received positive news. The price of Aviation Turbine Fuel (ATF), or jet fuel, has been slashed. In Delhi, the ATF price has been reduced by 7 per cent, or Rs 6,673.87 per kilolitre (kl).
After this cut, jet fuel will now cost Rs 88,951.17 per kl in the national capital. This reduction is expected to lower the operational costs for airlines, potentially leading to more stable or even lower airfares for passengers. Price revisions for ATF also occur on the first of each month.
Impact and Market Dynamics
The divergent price movements highlight the varying international market dynamics for different petroleum products. The hike in commercial LPG will increase the operational overhead for a wide range of food-based businesses. Small eateries and street vendors, who operate on thin margins, are likely to feel the pinch the most. This could potentially lead to increased prices for consumers dining out.
On the other hand, the cut in ATF prices provides a breather to the aviation sector, which has been grappling with high fuel costs. Jet fuel constitutes a major portion of an airline's operating expenses. This reduction will improve their cost structure and could have a positive impact on their financial health in the current quarter.
It is important to note that these revisions are for commercial LPG and ATF only. The prices of domestic LPG cylinders used in households, as well as petrol and diesel, have remained unchanged at this time. The government and oil companies continue to monitor global crude oil prices and foreign exchange rates to determine future adjustments.
