Poor man's fuel kerosene sees sharp rise in price even as usage dips

Domestic consumption has been coming down in recent years

The price of the poor man’s fuel kerosene has more than doubled in major cities even as its usage has been declining.

Kerosene costs 104-112 per cent more in Kolkata and Mumbai as of February 2022, compared to prices in April 2020 around the beginning of the Covid-19 pandemic. The price in Chennai is up 10.3 per cent in the same period. Chennai has historically provided a higher state subsidy for the fuel.

The price rise is even higher if compared to a few years ago (see chart 1).

The impact of this is less than what it would have previously been, given that much of the population has switched to cleaner fuels like liquefied petroleum gas. In fact, domestic consumption of kerosene obtained through the public distribution system has fallen from 6.9 million metric tonnes in 2014-15 to 1.6 million metric tonnes in 2020-21, according to provisional government data.  

There has also been a persistent gap between production and consumption of kerosene. The overall consumption also includes industrial and other uses though domestic consumption accounts for around 90 per cent of the total end consumption, according to government data.

The total consumption of kerosene between April 2021 and January 2022 was 1.3 million metric tonnes while production was 1.6 million metric tonnes. Production has been dropping in recent years. Consumption has also dropped significantly (see chart 2).

This does not mean that usage of kerosene has been eliminated entirely, though budgetary support through subsidies has waned.

The use of kerosene has actually gone up for some sections of society between 2019 to 2021, showed an Initiative for Sustainable Energy Policy (ISEP) study of energy usage in Jharkhand published in January 2022 entitled, ‘Jharkhand Rural Energy Access: Enduring Challenges  in  Quality, Affordability, and Billing’

“Tribal households' reliance on kerosene for lighting has increased from 11% to 21%, and amongst electrified tribal households with grid access, use of the grid as the primary source of lighting has decreased from 87% to 74% despite an overall increase in tribal households’ access to electricity,” said the study authored by World Bank consultant Diksha Bijlani, University of Pittsburgh associate professor Michaël Aklin, University of Miami assistant professor Brian Blankenship, ISEP program manager Vagisha Nandan and Johns Hopkins School of Advanced International Studies professor Johannes Urpelainen.

Cost and poor quality of electricity supply is said to be among the reasons for lack of use.

The expense was also a factor in the use of LPG as cooking fuel.

“Cost was still the main reason for dissatisfaction, followed by the distance to travel to obtain a refill. Despite interest to get LPG, the main barriers for households not having or sustainably using LPG were still the cost of connection and the monthly expense of LPG refills,” it said.  

Many states have already declared themselves free from the use of kerosene.

“During FY 2020-21… Andhra Pradesh, Andaman & Nicobar, Chandigarh, Dadra & Nagar Haveli and Daman & Diu, Delhi, Haryana, Ladakh, Puducherry and Punjab are kerosene free,” said the government’s Indian Petroleum and Natural Gas Statistics 2020-21 report.