Why LPG prices change every month (and fuel every week)

Every month we get the same question, usually phrased as an accusation: why did the price go up again? It is a fair question and it deserves a real answer, because the honest one is that almost none of it is decided locally.

Where an LPG price comes from

There are four links in the chain, and your dealer is the last and smallest:

1. The international contract price. LPG in this region is benchmarked against a monthly contract price set in Saudi Arabia — widely called Saudi Aramco's CP. It is published at the start of the month and it moves with world supply, demand and winter heating in the northern hemisphere.
2. The peso-dollar rate. The cargo is paid for in dollars. If the peso weakens, the same cargo costs more pesos even when the dollar price has not moved at all. This is the part that most often surprises people.
3. Shipping, terminal, excise and VAT. Freight to the Philippines, storage and handling at the terminal, excise tax on petroleum products, and 12% VAT on top.
4. Hauling and the dealer margin. Getting cylinders from the filling plant to your barangay, the cost of maintaining a float of steel cylinders, and whatever the dealer makes.

That last link is the only one anyone local controls, and it is a thin slice. When the first two move, the retail price moves, and no amount of haggling at the shop changes the arithmetic.

Why fuel changes weekly but LPG monthly

Pump prices for gasoline and diesel are adjusted most Tuesdays, tracking the weekly average of regional product prices. LPG follows the monthly contract price instead, which is why your cooking gas price tends to hold steady for weeks and then step up or down all at once.

It also means the two can move in opposite directions in the same month. They are different products on different benchmarks, even though they come off the same refinery.

Why a rollback takes a few days to reach the shop

This is the part that looks like cheating and usually is not. A dealer holding fifty full cylinders bought at last month's price still has to sell those fifty before the new price applies to anything they own. Sell them at the new lower price immediately and they take the loss on stock they already paid for.

Most honest dealers clear old stock over a few days and switch. A dishonest one holds the high price for three weeks and hopes you do not notice. The way to tell the difference is simple: ask what the price was last week, and watch whether it comes down at all.

Our own rule is that the price we quote you when we confirm your order is the price you pay on delivery, even if the market moves in between. That is the one part of this we can actually promise.

What you can do about it

• Buy the bigger cylinder if you use a lot. The price per kilogram drops as the size goes up. A 22 kg tank is cheaper per meal than two 11 kg tanks.
• Refill rather than buy new. Once you own a cylinder you are only ever paying for gas.
• Do not stockpile for price reasons. Hoarding cylinders to beat a price rise saves a little money and introduces a real storage hazard. Not worth the trade.
• Fix the leak and turn the flame down. Boring, but 20–30% off your consumption beats any price movement you will see this year.

Today's prices are always on our LPG page and fuel page. If a figure there is ever out of step with what we charge at the counter, the counter is wrong and we want to know.