India’s LPG crisis: The cost of weak energy planning | Let Me Explain | Pooja Prasanna

For most households in India, LPG is part of a routine. You keep track of when the cylinder will run out, you book a refill in advance, and you plan around it.

It’s not a seamless process, but it works. Until it suddenly doesn’t.

Right now, across India, that routine is breaking down. Households are waiting days, sometimes weeks, for refills. Restaurants are shutting kitchens. Public transport is hit. Factories are slowing down, or stopping work altogether.

And what looks like a supply delay is quietly turning into something much bigger — an economic disruption, a policy stress test.

Because this isn’t just about a shortage.

It’s about how a global conflict, thousands of kilometres away, exposed the fragility of India’s energy supply chain almost overnight. 

How the Modi government’s default response was denial

What could have been done to avoid this crisis

And what can be done to strengthen the system now. 

Let me explain.

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Now, let’s get into what’s really going on.

The LPG shortage is no longer limited to delayed deliveries.

Across cities, households are facing wait times stretching into days, even weeks. This has triggered panic booking, pushing demand spikes that further strain an already tight system.

But the impact doesn’t stop there.

Labour-intensive sectors are among the worst hit. In Gujarat’s Morbi, ceramic and tile units have shut down. Textile clusters in Surat and Tiruppur are slowing production. Brick kilns, food processing units, and dairy operations that rely on LPG are struggling to function. 

The hospitality sector has taken a direct hit. Restaurants, roadside eateries, bakeries, and sweet shops have either scaled down or shut operations due to lack of commercial LPG. This has had a knock-on effect on demand for essentials like edible oil, sugar, and packaged food supplies.

In southern states, the impact has been uneven but significant. In Tamil Nadu and Karnataka, small eateries and catering services have cut operations or shifted to firewood. In Kerala, where LPG dependence is high, households and tourism-linked businesses are facing acute delays, while small-scale seafood processing units have faced interruptions. PG accommodations are no longer able to provide food. Auto rickshaws and cabs that depend on LPG have stayed off the roads.This creates a ripple effect.

Workers lose income, supply chains weaken, and small businesses struggle to survive. In several cases, migrant workers are once again beginning to return home, echoing patterns seen during COVID.

At the same time, black markets have surged, with cylinders being sold at multiple times the official price.

Now, to understand how this began, we need to rewind.

(put rewind visuals)

In early March 2026, after the US and Israel attacked Iran and the conflict escalated across West Asia, Iran closed the Strait of Hormuz, one of the world’s most critical energy routes.

For India, this was a direct choke point.

Around 60% of India’s LPG demand is met through imports.

Nearly 90% of those imports pass through Hormuz.

And India’s vulnerability became immediately visible.

The country has very limited LPG storage capacity, barely enough for a couple of days of consumption.

At the same time, demand has doubled over the past decade due to expanded LPG access, without matching growth in storage or infrastructure.

So when one chokepoint collapsed, the entire system tightened. India choked because the system had no buffer.

So how did the Modi government respond?

Prime Minister Narendra Modi and Home Minister Amit Shah were central to the government’s messaging.

In the early phase, the messaging was consistent — there is no shortage, there is no need to panic, supply is under control, etc.

(put Modi speech, Amit Shah TN interview)

Government statements repeatedly emphasized that disruptions were due to panic buying and misinformation, not actual scarcity.

In fact, even as people were facing the repercussions of the shortage on ground, senior leaders including Modi went after leaders from the opposition like Rahul Gandhi saying they are fear mongering.

But as the crisis deepened, the framing changed.

PM Modi began comparing the LPG situation to COVID suggesting that this too was a global crisis that India would manage.

But that comparison opens up a much deeper issue.

Because during COVID, India followed a similar pattern.

In the early stages, the severity of the crisis was not fully acknowledged. Political rallies and elections continued, and public messaging focused on reassurance.

Then, suddenly, a nationwide lockdown was announced with very little preparation.

The consequences were severe.

Millions of migrant workers lost jobs overnight. Supply chains collapsed. People were left to manage on their own, often walking hundreds of kilometres to return home.

Now, during the LPG crisis, we see echoes of that same approach.

After it no longer becomes possible to deny the crisis, the narrative shifts to external causes.

The issue here is not just communication. It is timing and preparedness.

For vulnerable groups — migrant workers, informal labour, small businesses — that delay has been devastating.

So what has the government actually done so far?

To really understand the response, you also need to understand the dilemma the government is facing right now.

Because this is not just a supply crisis. It is a prioritisation crisis.

On one side are domestic consumers who depend on LPG for daily cooking.

On the other side are industries that drive jobs, exports, and economic activity.

And right now, the government is caught between the two.

As supplies began to stabilise slightly with easing tensions in west Asia and some shipments resuming, the government started restoring fuel supplies to key industries.

But this came with a trade off. Every cylinder diverted to industry is one less cylinder available to households.

This is why policy has appeared inconsistent.

At one point, domestic consumers were prioritised to avoid a social crisis.

At another, industrial supply had to be restored to prevent economic slowdown.

This balancing act is at the heart of the ongoing shortages.

And it explains why shortages have persisted even as supply conditions improved on paper.

Now let’s look at the actual measures taken.

1. Boosting Domestic Production

Refineries were ordered to maximise LPG output, even diverting resources from petrochemical production.

2. Prioritising Household Supply

3. Distribution Controls

Booking limits and refill restrictions were introduced to curb panic buying.

4. Crackdown on Hoarding

Thousands of raids were conducted, and black market networks were targeted.

5. Push for Alternatives

The government accelerated piped natural gas expansion and promoted alternatives like kerosene and biogas.

These steps helped, but most were implemented after the crisis had already escalated.

To put it simply, the response was reactive, not preventive.

And that brings us to the bigger issue.

This crisis did not come out of nowhere.

It exposed deeper structural problems that have been building for years.

What we are seeing today is the result of long-standing policy gaps that were known, visible, and repeatedly flagged over the years.

In the past decade, LPG access expanded rapidly, especially through welfare schemes targeting rural and low-income households. While this was a major achievement, storage capacity, transport networks, and supply buffers did not keep pace. 

This created a system with high dependence but weak resilience, one that works in normal times but comes under immediate stress during disruptions.

Besides, unlike crude oil, LPG storage remains extremely limited, covering only a few days of demand in a real disruption scenario. This leaves almost no buffer to absorb shocks.

Another factor is that despite the surge in demand, domestic production has not kept pace. This widening gap has increased reliance on imports, making India more exposed to global supply disruptions and price volatility.

Also, nearly 90% of India’s LPG imports pass through the Strait of Hormuz, a long-identified geopolitical chokepoint. Despite repeated tensions in the region, supply routes were not sufficiently diversified.

Alternatives like piped natural gas, electric cooking, and biogas have seen slow and uneven expansion. Urban PNG coverage remains limited, and scalable rural alternatives are still underdeveloped, leaving most households heavily dependent on LPG with few fallback options.

Storage infrastructure and distribution networks are uneven across states. 

Also, there was no clear, pre-defined system for managing energy supply shocks. 

Now, to understand the scale of this gap, it helps to look globally. Countries like China relied on large reserves and diversified supply routes, avoiding visible shortages.

Smaller economies like Cambodia quickly rerouted supply chains.

The difference is simple. Countries that prepared absorbed the shock, while India had to react in real time.

So what this crisis ultimately shows is not just a failure of supply, but a failure of planning. And the real question now is not how India responds to this crisis, but whether it prepares differently for the next one.