{"id":217523,"date":"2022-12-07T20:23:09","date_gmt":"2022-12-07T14:53:09","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=217523"},"modified":"2022-12-07T20:23:09","modified_gmt":"2022-12-07T14:53:09","slug":"fixing-gas-prices","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/fixing-gas-prices\/","title":{"rendered":"Fixing gas prices"},"content":{"rendered":"\n<p><strong>Source<\/strong>&#8211; The post is based on the article <strong>\u201cFixing gas prices\u201d <\/strong>published in the<strong> Business Standard <\/strong>on <strong>6th December 2022<\/strong>.<\/p>\n<p><strong>Syllabus: <\/strong>GS3- Infrastructure- Energy<\/p>\n<p><strong>Relevance<\/strong>&#8211; Petroleum and gas sector<\/p>\n<p><strong>News<\/strong>&#8211; The article explains the issue of gas pricing in India.<\/p>\n<h5><strong>What are the commendations of Kirit Parekh for gas pricing?<\/strong><\/h5>\n<p>It has suggested a cap of $6.5 per million British thermal unit(btu) as a ceiling and a floor of $4 per million btu on gas supplies from ONGC and Oil India older fields. It also applies to <strong>administered price mechanism gas<\/strong>.<\/p>\n<p><strong>What is the current mechanism for gas price in India?<\/strong><\/p>\n<p>Gas prices are adjusted every six months in India in line with i<strong>nternational pricing benchmarks<\/strong>.<\/p>\n<p>It is pegged to oil or substitute fuels. India current gas pricing formulae are pegged to international benchmarks like <strong>US Henry Hub and Russian and Canadian domestic gas<\/strong> rates. It brings them close to markets.<\/p>\n<h5><strong>What is the rationale behind the recommendations of this committee?<\/strong><\/h5>\n<p>Domestic gas prices will be linked to 10% of the cost of crude oil imported into India.<\/p>\n<p>The reason for altering the peg is that gas now costs more than oil. In such a situation, industries and households move to alternatives like naphtha and fuel oil.<\/p>\n<p>It does not matter much in <strong>mature markets<\/strong>. But, in the case of India, it has invested large sums in gas transmission pipelines, LNG import terminals and city gas networks. This can become a cause of concern.<\/p>\n<p>India allocates scarce APM gas to fertilizer plants and city gas facilities. It depends on <strong>imported LNG<\/strong> for over half its needs. This ratio will increase in the near future due to government policies.<\/p>\n<h5><strong>What is the way forward for gas pricing?<\/strong><\/h5>\n<p>Oil and gas exploration is an <strong>expensive and high-risk business<\/strong>. Investors expect <strong>pricing freedom and policy certainty<\/strong> to protect their investments.<\/p>\n<p>Therefore, it is important to provide<strong> pricing freedom and policy certainty<\/strong> at all times.<\/p>\n<p>If the government wants to prevent <strong>supernormal profits<\/strong> during periods of high prices, a <strong>transparent windfall tax<\/strong> could be an option.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source&#8211; The post is based on the article \u201cFixing gas prices\u201d published in the Business Standard on 6th December 2022. Syllabus: GS3- Infrastructure- Energy Relevance&#8211; Petroleum and gas sector News&#8211; The article explains the issue of gas pricing in India. What are the commendations of Kirit Parekh for gas pricing? It has suggested a cap&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/fixing-gas-prices\/\">Continue reading <span class=\"screen-reader-text\">Fixing gas prices<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-217523","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/217523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=217523"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/217523\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=217523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=217523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=217523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}