The dust appears to have settled - at least for now - on the cooking gas crisis that erupted in the early months of 2026, shortly after the outbreak of the war in the Gulf that precipitated the blockade of the Strait of Hormuz. The virtual lockdown of the critical waterway, through which almost a fifth of thecrude supplies passes, has been particularly painful for India because close to 90% of its LPG import is shipped through the strait.

India is one of the world's largest consumers of cooking gas. It has over 330 million domestic and subsidized household LPG connections. That number has ramped up considerably since the launch of the Pradhan Mantri Ujjwala Yojana (PMUY) that provides heavily subsidised LPG connections to very poor households.

India does not have a strategic buffer stock for LPG, unlike crude oil, which possibly exacerbated the crisis. The annual consumption of LPG in the country stands at 33.2 million tonnes, of which 20.5 million tonnes is imported. This means that external sources meet 60% of the demand. In March 2026, India's LPG import volumes plunged by 40% to 46% from the level in the previous months as tankers were stranded in the Persian Gulf.

Official sources say that the country was forced to fork out about 29% more per tonne to obtain LPG from alternative sources, effectively padding its LPG import bill by $ 1.1 billion over a six-month period.

Households went into a state of panic as cylinder deliveries were delayed. Soon a vibrant black market emerged and prices hit the roof in several cities. Wading into the crisis, the opposition parties launched a fierce attack against the government for failing to deal with the situation.

Their argument was that the minimal strategic long-term LPG storage capacity with the oil marketing companies was barely enough to cover a few days of consumption. It provided no cushion at a time when tanker shipments were badly disrupted. The bottling plants, refining networks, and last-mile logistics could not keep pace with the dramatic surge in demand, aggravating delivery delays and triggering panic localized buying.

There is some merit in the criticism. But there is a broader - and perhaps more pertinent --question that needs to be asked: why does India have to depend so much on LPG imports when it exports between $ 65-85 billion worth of refined petroleum products every year? LPG, which is primarily a blend of propane and butane, exists naturally within natural gas. When the gas is processed, LPG is stripped out before methane gas is sent through the pipelines to manufacture more lucrative petro products.

India has the 4th largest refining capacity globally, anchored by the massive facilities available at Reliance Industries' Jamnagar refinery.

This column has never shied away from criticising the bigwigs in the petroleum industry for their shortcomings and sharp practices. But I must acknowledge that during the recent LPG crisis, the oil marketing companies and the ministry of petroleum and natural gas managed the situation reasonably well. The panic abated very quickly after everyone rallied to face the challenge.

But there are a couple of things that we must know about the workings of India's petroleum industry before we start to slam the government and the petroleum industry for failing to get their act together.

First, India is not a major exporter of petroleum products as is normally claimed. It exports just 30 million tonnes of petroproducts - which is a miniscule amount when compared with the magnitude of global trade in crude and petroleum products.

Second, LPG is a byproduct from crude refining. Depending upon the refinery complexity and configuration and the product mix it produces, about 1 to 4% of the crude gets converted into LPG while cracking crude. India would need to expand its refining capacity several fold and refine colossal quantities of crude to produce enough LPG to meet the demand for gas from households, industry and the transportation sector. If we ramp up capacity, then we will also generate a huge surplus of petroleum products that will have to be sold overseas because local consumption is too small. That leaves us with a stark option: it is better to simply import LPG from countries that do not have a large demand for this byproduct from crude refining.

An LPG supply crisis of such magnitude has occurred for the first time. But it can happen again because the geopolitical situation still rests on a tinderbox. The intense rivalry between Israel and Iran is unlikely to end in the near future. Israel wants to make sure that Iran will abandon all hope of acquiring a nuclear weapon. Iran is unwilling to make such an unequivocal commitment. The US cannot back down because political compulsions at home requires every US President to stand resolutely behind Israel in the face of any confrontation in the region.

As for India, the sensible option would be to diversify it LPG supply sources to countries that do not need their ships to go through the Strait of Hormuz. At the same time, efforts must be made to speed up the process of laying out the pipelines to supply compressed natural gas (CNG) and piped natural gas (PNG). The sooner that the PNG pipelines are built the quicker we can insulate households from the pangs of global supply chain shocks.