Energy security versus myopia: India’s LPG scarcity highlights the need for robust central planning

The nationwide shortage of cooking gas over the past week should abate soon, given that import supplies are on their way to Indian shores even as domestic refiners have been asked to bump up production.The crippling shortage of this item of mass consumption that has proven to be the Achilles heel of our energy security calculus partly owes its origin to well-intentioned policy efforts to shift households from kerosene to liquefied petroleum gas (LPG), a cleaner fuel. While only half of India’s population had access to LPG in 2010, its coverage is nearly complete today.

Our import dependency in meeting this demand, which now stands at around 60%, has risen not just because Indian production has not kept up, but also on account of an inherent technical limitation.While a refinery can convert up to about 14% of its input crude into kerosene, its LPG output typically does not exceed 4%. In one instance during the first decade of this century, the government nudged a private refiner to forsake churning out export-oriented aviation turbine fuel (or jet kerosene) for the supply of less remunerative regular kerosene in the Indian market to avert disruptions and price shocks.

While this policy approach has been in scant evidence, we face the larger issue of widening supply gaps left by commercial and strategic interests. How we address them matters in the context of global energy volatility.

Over the past decade, India’s strategic initiatives for energy security have largely focused on raw-material sufficiency. The government created special storage facilities to hold reserves of crude oil, though not petroleum products.

After the disruption caused by the Iran war’s outbreak, it asked refiners to maximize LPG output. This