High diesel usage makes fuel demand grow for first time since February; festivals come at rescue

The sudden fall in India’s fuel demand in the lockdown months have started to rebound during the ongoing festive season. The country’s fuel demand witnessed its first yearly increase since February as diesel demand shot up in October 2020. Overall demand for petroleum products rose 2.5 per cent in the month, reaching 17.77 MT, compared to 17.34 MT in the same duration last year, showed the provisional data published by the Petroleum Planning and Analysis Cell. The petrol consumption had reached pre-COVID levels in September itself, now, the diesel consumption has also returned to normalcy. 

Diesel demand soared 7.4 per cent on-year to 6.5 MT while petrol sales rose 4.5 per cent at 2.54 MT. This growth in diesel consumption is the highest in a year, after the nationwide lockdown forced transport to come to a standstill. Even as the festive season boosted the fuel demand, public transport is still struggling to come to normalcy due to shut educational institutions, including schools. 

India is among the world’s top-3 oil consumers, and a larger portion of the petroleum demand is met through imports. While the coronavirus vaccine has been announced, and the lost demand is regained by the world’s third-biggest oil consumer, the consolidated effect can be seen in the oil prices in near-term. The global oil prices suffered a sharp fall after various economies locked themselves to arrest the spread of the coronavirus pandemic earlier this year. However, the benefit of low prices was not passed to the consumers as the government had raised taxes to reap benefit from the fallen prices by filling its coffers when other means of revenue generation were at a near-standstill. 

Meanwhile, petrol and diesel prices in India have not changed in more than a month. While petrol prices have remained unchanged since 22 September 2020, diesel prices have been static since 2 October 2020. Petrol price in Delhi is Rs 81.06 per litre, and diesel price is at Rs 70.46 per litre.