Frequently Asked Questions
LPG Pricing
Why the change to LPG Pricing?
Over the past few years, our suppliers have incrementally moved domestic prices to link with the Saudi Contract Price “CP” index. This means the price we pay for both domestic and international LPG is now based on World Market prices.
How does world LPG Pricing work?
World LPG pricing is driven by many factors such as demand from the Northern hemisphere winter and increased demand from developing economies.
LPG pricing is linked to the Saudi Aramco CP Index not to Dubai Oil prices (petrol). Unlike Dubai Oil prices which change daily, the LPG Saudi Armco CP Index is set on the first day of every month and can fluctuate up and down each month.
LPG is sold in US$ so any change in the NZ$ exchange rate will affect both local and imported product (as the two are now linked).
How does OnGas pricing to residential customers work?
Although the CP Index (priced in USD on the International Market) experienced a large decrease earlier in 2008, further drops have been stymied by the declining US-NZ exchange rate. The cost of shipping LPG to NZ is also priced in USD and therefore the exchange rate decrease was also compounded by this. The net effect was that, although the price of LPG on the International Market had decreased, the cost of importing this product into New Zealand had increased.
OnGas does not price its residential market “on the curve” in respect to the CP index. What this means is, that if we were to change our LPG price in line with the CP index variance each month, you would experience a price increase or decrease every month. To give our customers some price certainty we aim to provide at least a 6 month fixed price, where possible. Hence, we provide a delayed notice period of price variations on the way up and on the way down.
Why are we buying from overseas? Are we running out of gas from New Zealand?
LPG is still being sourced from New Zealand fields, but we’re experiencing increased demand for LPG which we supplement from overseas sources.
New Zealand currently imports close to 50% of its LPG annually. Although a by-product of natural gas supply, not all gas fields extract LPG. Therefore, having lots of domestic natural gas doesn’t always mean lots of LPG.
What you can expect
Much like oil and petrol prices, going forward you can expect to see more frequent LPG product price variations, as they will now be related to World Market LPG prices and the NZ/US dollar exchange rate.
Thanks for choosing OnGas. We value your custom and constantly review our prices as market conditions change to ensure OnGas LPG remains a competitive energy source.
If you have any queries contact:
- Residential: OnGas Customer Services team on
0800 84 12 12 - Commercial: Your OnGas Account Manager
