NEW DELHI: The sweltering heatwave sweeping across India has precipitated a notable decline in diesel demand, with sales plummeting by 4% in June, according to preliminary data from state-owned enterprises released on Monday.
Traditionally, fuel sales experience a surge during election periods; however, this year has defied historical trends, witnessing a consistent month-on-month decline even post the general elections. The three major state-owned firms, which dominate 90% of the fuel market, reported petrol sales of 1.42 million tonnes in the first half of June, a marginal increase from the 1.41 million tonnes recorded in the same period last year.
Diesel consumption, a critical indicator of economic activity, saw a 3.9% drop to 3.95 million tonnes from June 1 to 15 compared to the same period last year. This follows a pattern of declining demand, with diesel consumption falling by 2.3% in April and 2.7% in March, and a further 1.1% drop in May.
Despite expectations that the summer harvest season and the increased use of air conditioning due to the extreme heat would boost fuel consumption, this year has bucked the trend. The reduction in petrol and diesel prices by Rs 2 per litre in mid-March, which ended a nearly two-year-long hiatus in rate revisions, was anticipated to spur sales but has not had the expected impact.
Month-on-month, petrol sales fell by 3.6% compared to the 1.47 million tonnes consumed during May 1-15, while diesel demand remained flat against the 3.54 million tonnes recorded in the first half of May. Diesel, which accounts for nearly 40% of all petroleum product consumption in India, is predominantly used in the transport sector, which accounts for 70% of diesel sales, and in agriculture, particularly in harvesters and tractors.
The data reveals that petrol consumption from June 1-15 was 4.6% lower than the same period in 2022, yet 28.1% higher than the Covid-impacted period of 2020. Diesel demand saw a significant 10.5% drop compared to June 1-15, 2022, but was 14% higher than the same period in 2020.
Jet fuel (ATF) sales, however, showed a year-on-year increase of 2.3% to 331,000 tonnes during June 1-15, 2024, although this was a 4.5% decrease month-on-month from the 346,500 tonnes recorded in the first half of May. Notably, ATF demand has surpassed pre-Covid levels, with consumption 10.1% higher than June 1-15, 2022, and 6.1% more than the same period in 2020.
Cooking gas (LPG) sales experienced a slight year-on-year increase of 0.1% to 1.24 million tonnes in the first half of June 2024. However, LPG consumption dropped by 0.9% compared to the same period in 2022, though it was 32% higher than in June 2020. Month-on-month, LPG demand fell by 5.2% against the 1.3 million tonnes consumed during May 1-15.
In summary, the extreme heat has significantly impacted fuel consumption patterns in India, with diesel and petrol sales experiencing notable declines, while ATF and LPG have shown resilience and growth in certain metrics. The data underscores the complex interplay between environmental conditions and fuel demand, challenging traditional consumption trends.