01-10-2023 : On Sunday, there was a noteworthy development in the energy market as the price of aviation turbine fuel (ATF) experienced a 5 percent increase, marking the fourth consecutive monthly rise since July. This price surge was accompanied by a substantial hike of Rs 209 per 19-kg cylinder in commercial cooking gas (LPG) rates, aligning with the strengthening trend observed in international benchmarks.
Specifically, the price of aviation turbine fuel (ATF) saw an increase of Rs 5,779.84 per kilolitre, representing a 5.1 percent uptick, in the national capital, resulting in a new rate of Rs 118,199.17 per kl, up from Rs 112,419.33. This increase followed the steepest-ever 14.1 percent surge (amounting to Rs 13,911.07 per kl) that was implemented on September 1, as well as an 8.5 percent or Rs 7,728.38 per kl increase on August 1.
These successive hikes in the price of jet fuel, which constitutes a significant portion (40 percent) of an airline’s operating costs, have the potential to further burden already financially strained airlines. Since July 1, ATF prices have escalated by a cumulative 1.65 percent or Rs 1,476.79 per kl, resulting in a record increase of Rs 29,391.08 per kl over the four hikes.
Simultaneously, oil companies raised the price of commercial LPG, primarily used in establishments such as hotels and restaurants, by Rs 209. As a result, a 19-kg commercial LPG cylinder will now cost Rs 1,731.50 in the national capital and Rs 1,684 in Mumbai. This price increase partly reverses the earlier reductions of Rs 157.5 per cylinder on September 1 and Rs 100 on August 1.
The surge in Saudi contract prices (CP), a benchmark utilized for determining LPG prices, reflects the recent firming up of crude oil prices driven by supply concerns. Notably, while oil companies had reduced domestic LPG rates by Rs 200 per 14.2-kg cylinder on August 30, there was no change in the price of 14.2-kg cylinders.
It’s worth noting that state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) regularly revise cooking gas and ATF prices on the 1st of each month based on the average international prices from the previous month.
In contrast, the prices of petrol and diesel remained frozen for a record 18th consecutive month. In the national capital, petrol was priced at Rs 96.72 per litre, while diesel was available at Rs 89.62 per litre. State-owned fuel retailers are mandated to adjust petrol and diesel prices daily, based on a 15-day rolling average of international fuel prices. However, they have not made any changes since April 6, 2022, except for a revision on May 22 when the government reduced excise duty to alleviate the impact of rising international oil prices on retail rates.