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Fuel demands in India drop in July as the monsoon arrive

According to a preliminary industry data report, India’s demand for petrol and diesel has dropped in the first half of July compared to the previous months as the arrival of the monsoon cut down the consumption and restricted transportation. The most widely used fuel in the country, Diesel saw a consumption fall of 13.7 percent during the first half of July, i.e, July 1 – 15 from 3.67 million tonnes demand to 3.16 million demand.

The onset and intensity of monsoon have a heavy impact on the diesel demand in the country and consumption of fuel is generally lower in July – September as compared to April – June. Due to heavy rains and floods, mobility has been restricted and demand from the agricultural sector that uses diesel for irrigation pumps and trucks is also dropped.

Consumption of Diesel

However, Diesel demand is almost 27 percent higher year on year (YoY) because of strong economic growth as well as a low baseline for the same period in 2021, when the second covid wave hit the country and its Economy.

Furthermore, the data suggested the consumption of diesel is 43.6 percent higher as compared to the 2.2 million tonnes demand from July 1 to 15 of 2020. Also, it is 13.7 percent more than before the pandemic in July 2019.

Consumption of Petrol

Demand for petrol dropped to 7.8 percent in the first half of July,i.e, from 1.38 million tonnes demand in the same period of the previous month to 1.27 million tonnes consumption during July 1 to 15.
However, the consumption is 23.3 percent higher as compared to consumption in July 2021. It is 46 percent higher than that of July 2020. The demand for petrol is 27.9 percent more than in the pre-pandemic period in July 2019.

In June, Auto fuel demand was supported by a rise in summer travel in vacations to colder areas like hill stations to escape the heat during the summer holidays in the educational institutions.
Due to the opening of the aviation sector, The overall passengers at the airport, both international and national, seem to be closer to the pre covid 19 levels.

An industry representative said that monsoon months are generally low consumption months however, overall fuel demand will continue its growth path during the rest of the year.

Fuel Consumption during COVID 19 lockdown

On March 25, 2020, the central government imposed a lockdown across the country to control the spread of COVID 19. The lockdown however stopped the country’s mobility and fractured businesses. It slowly eased in two months.

Consumption of LPG

There is a 14.5 percent year-on-year (YoY) rise in the sale of cooking gas LPG with 1.24 million tonnes of demand in the first half of July. The rise in consumption is despite the hike of Rs 50 per cylinder.

LPG consumption is 16.6 percent higher as compared to July 2020 and 8.6 percent more than July 2019.

The demand for LPG is 8.3 percent more in the first half of July as compared to the same period in June with 1.15 million tonnes of demand, the data suggested.

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