Diesel consumption falls in August

The consumption of diesel, one of the country’s two main transport fuels, has fallen after a long time as disruptions caused by Covid-19 continue to impact economic activity and demand.

In the first two weeks of August, diesel consumption has fallen by almost 20 per cent, as compared to the same period of the previous month. The fall is even more stark, compared to last year as figures, given by state-run refiners, show consumption is down by 23 per cent.

Compared to this, the other transport fuel, petrol, has been having a relatively better run as its consumption has actually grown by about 2 per cent in the first fortnight of August. But, even it is down 6 per cent year-on-year (yoy).

Surprisingly, LPG (cooking gas) consumption, which had seen a spike in April and May following the nationwide lockdown, has also seen a fall in demand with consumption dropping 6.5 per cent in August this year from the month earlier. Even, jet fuel sales fell by 2 per cent and by 66 per cent, compared to the previous month and the same month a year earlier, respectively.

The month-on-month decline in fuel demand indicates that markets are still spooked by Covid-19 as indicators suggest that the pandemic may be long-drawn. It also ends a ray of hope generated in late May and June when easing of lockdown across the country started economic activity and gave a boost to fuel demand.

Refiners are operating at just about 70-75 per cent of their capacity in August due to sluggish demand conditions and lower sales. This is down from 90 per cent capacity utilisation in July.

Lower diesel consumption is also reflecting on retail prices of the fuel that has not seen volatility for last two weeks while petrol continues to be on a roll again with its pump prices rising by 30 paisa per litre in last two days.