Amidst the fuel subsidy and hiked prices over the week, there has been a reported drop in the price of cooking gas. The drop in the price of cooking gas is a supply-driven phenomenon.
Unlike petrol, cooking gas is not subsidized by the government. Thus the price of cooking gas is majorly determined by the market forces.
The market forces of demand and supply that determines the price of cooking gas is based on the availability of cooking and the little or no currency flow is one of the driving forces behind the decrease in price.
Changes in cooking gas prices can be associated to changes in crude oil prices, exchange rates, shipping costs, and demand for Liquefied Petroleum Gas (LPG). Crude oil prices typically influence domestic LPG prices in the international markets; as the price of crude oil rises, LPG prices often follow suit.
The currency exchange rate is another factor, as importers require dollars to import LPG. The rise in the cost of local and international shipping and the surge in demand for LPG are also factors affecting the price of LPG.