Non-subsidized Gas Prices Rise and Melon Gas Scarcity Threats

Rancakmedia.com – The price of non-subsidized gas has increased, non-subsidized liquefied petroleum gas (LPG) has increased as of February 27, 2022. Corporate Secretary of PT Pertamina Patra Niaga Irto Ginting stated that Aramco's Contract Price (CPA) was recorded at US$775/metric ton.

In his official announcement, he stated that the average CPA price would increase by 21% in 2021. Even though it went up, Irto personally ensured that the 3-kilogram LPG subsidized by the government would not experience price adjustments.

The price of 3 kg LPG still refers to the Maximum Retail Price (HET) set by the local government. However, the increase in the price of non-subsidized LPG has forced many people to switch to 3 kilograms of LPG.

Bonifacius, a grocery store owner in the Duren Sawit area, East Jakarta, said that many clients have switched to 3-kilogram LPG. The same thing happened to Ehma, a home customer in the Cilegon area who has started to switch to 3kg LPG.

Views of Economic Observers

On Thursday, January 23, 2020, officers at the Pancoran Mas gas agency in Depok, West Java, recorded three kilograms of LPG gas cylinders. The government is trying to limit the distribution and adjust the price of 3 kilograms of LPG.

Bhima Yudhistira, Economist and Director of the Center for Economic and Legal Studies (Celios), estimates that when the price of non-subsidized LPG rises, more people will switch to 3 kg LPG.

This is related to the large number of middle class whose income has not recovered due to the epidemic, while the price disparity between subsidized and non-subsidized gas is widening.

Non-subsidized Gas Prices Rise

The Solution for Rising Non-Subsidized Gas Prices

The occurrence of migration, is likely to lead to scarcity of gas melon in the market. Bima emphasized that there were only two alternatives that the government could take ahead of this exodus.

First of all, there should be no increase in LPG prices in the future. "So the adjustments are enough, don't mess with them anymore. Because the impact of melon LPG will shift if non-subsidized LPG is changed again," said Bima.

Furthermore, Bhima added, the government could use the compensation money to avoid rising costs for non-subsidized LPG.

Second, the government must increase the amount of money spent on energy production subsidies. According to Bima, all energy subsidies in the 2022 State Budget (APBN) amount to IDR 134 trillion.

For him, an increase in subsidies of IDR 180-200 trillion is the ultimate goal of his plan. This is because the increase in gas and crude oil prices is expected to have a long-term impact on the world.

Closed Subsidies May Not be applied

Meanwhile, according to Bhima, it is inappropriate to apply closed subsidies in an effort to prevent the current scarcity of melon gas.

In contrast to open subsidies that free anyone to buy, closed subsidies only allow people with certain criteria. Many people will be harmed by this. This is because the buyers of melon gas are not only the poor, but also SMEs.

According to Bhima, the supply of gas melons is dwindling, so people who meet the requirements may not be able to get them.

“Don't switch too quickly from open to closed subsidies, the momentum is not right. The price of LPG should have been lowered since yesterday," he continued.

Conclusion

Aramco's contract price (CPA) was recorded at US$775/metric ton. The average CPA price will increase by 21% in 2021. The price of 3 kg LPG still refers to the Maximum Retail Price (HET) set by the local government.

However, the increase in the price of non-subsidized LPG has forced many people to switch to 3 kilograms of LPG. The occurrence of migration, is likely to lead to scarcity of gas melon in the market.

Bima emphasized that there were only two alternatives that the government could take ahead of this exodus. First of all, there should be no increase in LPG prices in the future. Second, the government must increase the amount of money spent on energy production subsidies.

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