The Union government has increased domestic natural gas prices from $8.60 per metric million British thermal unit (mmBtu) to $9.20 per mmBtu for October, reported CNBCTV. According to a notification released by the Ministry of Petroleum and Natural Gas on Saturday, the revised prices will be applicable from October 1 to October 31, 2023.
This price adjustment is expected to impact consumers, as gas distribution companies are likely to raise the prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG). The government had also hiked natural gas rates last month, revising them from $7.85 per mmBtu to $8.60 per mmBtu, according to the report.
How are natural gas prices calculated?
Natural gas prices are determined based on the Indian crude basket, a shift from the previous method, which took into account the prices at four major global gas trading hubs: Henry Hub, Albany, National Balancing Point in the United Kingdom, and Russian gas.
The pricing mechanism has also changed in terms of frequency. Previously, prices were set every six months. However, since a committee was formed in October 2022 to devise a new pricing formula, prices are now revised monthly. This new approach is based on the committee's recommendations.
An increase in gas prices can drive inflation and may lead to higher costs for goods and food items. Additionally, as CNG is an essential part of the country's clean energy alternatives, a rise in its cost will likely affect CNG car owners.