Running on All Cylinders

GOI says there is no shortage of cooking gas (LPG). But many people say something different. Some gas cylinders are being sold for twice the official price. This usually means a black market has appeared.

Why is this happening? Recently, GOI reduced LPG supply to restaurants and other commercial kitchens. The idea was simple: until gas supplies improve, homes should get gas first.

This makes sense at first. But restaurants and food stalls are also very important. They employ lakhs of workers and serve food to crores of people every day. If these kitchens cannot get gas legally, they may try to get it illegally. That means cylinders meant for homes can get secretly diverted to businesses.

India has seen this problem before. In the 1970s, many things were in short supply. People had to wait years for LPG connections or even scooters like the Bajaj Chetak. Items like rice, sugar, kerosene, and cooking oil were rationed, and black markets often appeared.

Today’s problem is partly due to global tensions affecting gas supplies, especially near the Strait of Hormuz, an important route for oil and gas shipments. But another big reason is that demand is high while supply for businesses has been cut off. When that happens, a black market easily grows.

In a perfectly free market, prices would simply rise when supply becomes scarce. But the government cannot easily allow this, because poor families would struggle if LPG became very expensive.

Black markets also add extra costs. Sellers charge more because the gas is scarce, and also because they are taking a risk of getting caught. This means gas can actually become more expensive in the black market than it would be if prices were allowed to rise normally.

So what can be done?

First, India should try to produce or buy more LPG.

Second, govt may need to slightly increase gas prices, even if it is unpopular.

Third, authorities should check gas distributors carefully and create online systems showing how many cylinders each gas agency has in stock.

When information is open and clear, it becomes harder for black markets to grow. Paying a bit more officially may not be pleasant, but it’s still better than secretly enriching middlemen while the system becomes unfair.

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