How India's LPG shortage is having an effect on California
What's the story
India, world's most populous country, relies heavily on LPG for cooking. The country has been cut off from Middle Eastern LPG, which accounted for over 90% of its imports before Iran war. In response to this crisis, the Indian government has ordered refiners to ramp up LPG production. However, this has resulted in a reduction in alkylate production, motor fuel additives made using LPG as feedstock. The reduction in alkylate supply is now raising fears of a shortage in California.
Fuel crisis
California may soon run out of petrol
The shortage is due to dwindling fuel production and exports from Asian refiners who are struggling to access Middle Eastern crude oil. Alkylates are highly sought after in California as they burn cleaner than the other additives, and the US state requires a unique gasoline blend to reduce the smog.
Price surge
Fuel prices in California continue to rise
California's average retail motor fuel price was $6.14 per gallon last week, after hitting an over three-year high of $6.16 on May 7. This is due to the state's unique fuel blend requirements and the ongoing global supply crisis caused by the war. GasBuddy analyst Patrick De Haan said lower alkylate supply will likely inflate prices as summer driving season boosts demand.
Market impact
People are queuing for hours to buy LPG cylinders
The LPG shortfall in India has been so severe that people have been queuing for hours to buy LPG cylinders, often only to be turned away and forced to buy from the black market. Reliance, which operates the world's biggest refinery in Jamnagar, Gujarat, announced this month it was cutting alkylate output and exports to maximize LPG production.