Due to decreasing crude oil prices and a drop in global gas prices, the cost of refilling a 12.5kg cylinder of liquefied petroleum gas (cooking gas) in Nigeria has decreased by 30% during the past two months.
According to a survey of key cities in Nigeria, the cost of cooking gas is moving down, from N10,000 two months ago to N7,000 as of Wednesday, June 7.
Despite the price dropping from N850 per kg at the end of April to N600–N550, local gas vendors in Martha Ogunsanya’s neighbourhood in Shimawa, Lagos, continued to sell each kilogram for N800.
This development lessens the burden on struggling households who have been dealing with a rise in the price of the good since the beginning of last year as well as the recent increase in gasoline costs as a result of the elimination of subsidies.
“LPG is an international commodity, with about 65 percent of domestic gas coming from imported sources,” Oga Adejo-Ogiri, executive secretary of the Association of Local Distributors of Gas, said.
He said prices in the country are linked to an international benchmark called Mont Belvieu, which has been on the downward slope for the last couple of months.
Mont Belvieu is the site of the largest underground storage facility for liquefied petroleum gas in the US. The US LPG market pricing indicator is driven primarily by the Mont Belvieu market and reported daily by the US Energy Administration.
The two countries that supply Nigeria with the most gas are the United States of America and Argentina. However, the Russia-Ukraine conflict, which broke out in February of last year, led to an increase in gas prices in these nations, particularly in the United States.
However, prices have been declining recently. The US Energy Information Administration estimates that on May 31, 2023, the price of natural gas will have decreased by 76.1 percent, from $8.78 per million BTU to $2.10. The price for May is the lowest since September 2020 and has been falling steadily since December 2022.
Before the price of cooking gas dropped, several households turned to unhealthy alternative energy sources such as coal, sawdust, kerosene, and others. According to the National Bureau of Statistics, more than half of Nigeria’s 113 million poor people cook with dung, wood, or charcoal.
According to Abiola Gbemisola, a consumer analyst at FBNQuest, the decrease in prices will ease the strain on household earnings, which will lead to a decrease in household expenditure.
“We have challenges; for example, gas cannot get to the customers directly; if you do not drill wells or build facilities to process gas, there will be no gas at the end market,” said Dabotekenari Alabo, General manager, crude oil and gas commercial at TotalEnergies.