Cooking Gas(LNG) Prices Will Increase Next Week, Marketers Warn

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Marketers have been hinting that gas prices will go up next week, which will make things tougher for people who buy gas.

Olatunbosun Oladapo, who is the head of the Nigerian Association of Liquefied Petroleum Gas Marketers, said that gas prices will go up starting next week.

He said that some of the reasons for the planned price review were rising overseas prices, high tax rates, ship prices, a lack of foreign exchange, and a drop in the value of the naira.

“It starts next week because prices have gone up around the world. Prices for ships have gone up, and taxes are high, but people aren’t making more money.

“They can’t buy as much as they used to. All the people are crying. “Consumers, middlemen, and retailers are all feeling the effects because business is now on the low side,” he said.

Olatunbosun said that the upcoming price increase was a shame.

“This is a very bad situation because prices are going up. Nigerian customers are having a hard time because they can’t afford gas anymore,” he said.

He says that people are now going back to cooking with logs, charcoal, and sawdust.

“The government should step in and help the people who are hurting by giving them relief and lowering taxes and fees.

“You can imagine that tax would cost N3.50 for every 1 kg of gas that costs N700. How much money is left in a business like this?” He kept going.

He told the government that people weren’t buying gas anymore, so they should tax profits instead of goods.

“Local taxes make the problem worse,” he said, and he asked marketers who could buy goods locally to set prices with “consumers’ feelings” in mind.

The Punch had just reported that a lack of ships on the international market would cause local prices of LNG, or cooking gas, to go up in the coming months. This made him respond.

Since there aren’t enough ships on the foreign market, charter rates have gone up before the winter of 2023, when demand for fuel to heat homes will be at its highest.

As of August 1, 2023, charter rates went up to $284,750 per day for November and $206,750 per day for October. This is four times the present price of $70,500 per day, according to data from Spark Commodities cited by Bloomberg.

“Tanker stocks are getting tighter because traders are using the ships as floating storage in a bet that LNG prices will go up as the weather gets colder.

“Variable shipping rates can cut into the profit margin of an LNG trader who wants to take advantage of higher winter prices, and rising transportation costs can lead to higher prices for buyers in Europe and Asia in the long run.”

Late in July, 42 LNG ships that had been out on the water for at least 20 days were watched, which is about 27% more than at the same time last year.

Nigerian LPG prices are compared to international prices based on the prices of Nigerian Liquefied Natural Gas Contracts. This means that international prices always affect Nigerian LPG prices.

Additionally, the NLNG CP is subject to review and change at least once to three times, just like the prices of other goods traded internationally and affected by market forces.

The decline in the value of the local currency would also have an impact on the price of LPG in the country.

The Central Bank of Nigeria says that on Wednesday, one dollar was worth N749.62.

Most of the time, Nigerian LNG sells the cooking gas it makes in Nigeria to off-takers at the current exchange rate.

The checks done by PUNCH showed that between July 28 and August 7, the prices for 20 metric tons of LPG at the big depots in Apapa, Lagos, were between N10.7 million and N11 million.

Prices for cooking gas in the United States have been low for a few months now because prices in other countries have gone down.

Due to the weakening of the naira, the price of LPG dropped from an average of N730 per kilogram in June to around N600 per kilogram in July. In August, the price went up to N750 per kilogram.

According to the U.S. Energy Information Administration, the price dropped by 76.1 percent from 8.78 per one million British Thermal Units on May 31 to 2.10 per one million BTU in June.

According to a study on retail gas prices from the National Bureau of Statistics, the average price of refilling a 5kg cylinder of cooking gas dropped by 6.71 percent from May to June, from N4,360.69 to N4,068.26.