Sales of petrol engined passenger vehicles and two wheelers have seen an increase in recent months, especially sinve the ban on diesel vehicles. This has increased the consumption of petrol. Consumption of fuel has been increasing over the last few years.
But thanks to diesel ban, more and more people are buying petrol powered vehicles. If we compare, diesel consumption surged 14% during the month of August 2016, petrol consumption increased substantially by 25% during the same period. This has resulted in a surge in petrol consumption which reached a 5 year high in the past month while diesel consumption surged primarily due to increased commercial transportation.
Besides petrol and diesel for vehicular consumption, consumption of other industrial and commercial fuels also saw a surge in demand. These included fuel oil, petcoke and aviation turbine fuel. This increased demand indicates improved economic activity. Even as petrol and diesel demand increased substantially during August, kerosene consumption declined by 13.5%. The month of August 2016 also saw consumption of Liquefied Petroleum Gas surge 19% y-o-y primarily due to the government offering special benefits to connect rural consumers.
Petroleum Planning and Analysis Cell (PPAC) has noted this higher demand from both the transport sector and static equipment. This surge in demand could be due to poor rainfall leading to higher water pump usage and growth of e-commerce resulting in increased movement of goods, specifically in the second half of the fiscal. Lower crude prices have resulted in higher demand growth of 2.2% globally as against an earlier 1.3% and this could also be a factor for increased demand in India.