Don’t Let Panic Grow

Right now, gas supply isn’t a crisis. GOI should communicate smartly

Markets are fickle, but on Tuesday they seemed confident Iran war will end soon. Their optimism stems from Trump, who’s now calling his war a “short-term excursion”, one that is “very complete, pretty much”. When war ends, oil and gas supplies through Strait of Hormuz will resume. Prices, and economic activity, will return to normal. Trump’s one-hour chat with Putin on Monday, followed by his hint of easing oil and gas sanctions on Russia, bolsters this hope. Russia, after all, is world’s second major oil exporter, and has the largest natural gas reserves.

And gas is the bigger problem right now, after 11 days of fighting. As we said in an earlier edit – tinyurl.com/479yyask – India meets about 60% of its LPG, and half of natural gas requirements through imports. Mostly from Qatar and other West Asian countries, which can’t send tankers now. Because gas is costlier to store than oil – it needs extreme cooling – we don’t have many weeks’ stock. Hence, GOI’s decision on Tuesday, to regulate gas distribution to different sectors until normal supply resumes. 

Ordinarily, the biggest share of natural gas goes to fertiliser factories. But now, PNG for kitchens and CNG for transport will be prioritised, followed by fertiliser and other industries, “subject to availability”. Likewise, LPG for households will be prioritised. While this is pragmatic, essential and non-essential uses shouldn’t be decided on old assumptions. Yes, people need food, so fuel for cooking has first claim on country’s gas stock. But, does everyone eat at home? Think about workers eating in factory canteens, truckers eating at dhabas, many people in small eateries. “Commercial” kitchens are as much a necessity as domestic kitchens. Without gas, a whole ecosystem of canteens, restaurants and lakhs of workers, can grind to a halt for days, or even weeks. So, distribution between domestic and commercial uses must not be too skewed against the latter.

Most important, GOI should make sure there’s no popular perception that there’s a crisis; there isn’t a crisis. Because of information asymmetry between gas sellers and the consuming public, perception of crisis can cause artificial shortages and price gouging. It’s govts’ job to ensure this doesn’t happen. Perhaps, now is the best time to preach energy conservation – cooking with a lid on, using microwaves and induction cookers, whenever possible. Govt offices in Philippines have been told to run ACs at 24°C while the oil shock lasts. And long-term, we absolutely must reduce our dependence on imported gas by expanding biogas production. India has enough compostable biomass to meet 100% of its gas needs. And compost can replace fertilisers. That’s hundreds of billions of dollars saved every year.

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https://ppac.gov.in/natural-gas/consumption#:~:text=Last%20updated%20Date%20on%20%3A%2027

https://www.bloomberg.com/news/articles/2026-03-04/india-households-face-a-looming-fuel-crunch-as-iran-crisis-drags

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