Fuel consumption rises on weak monsoon

Consumption of diesel and petrol surged about 9.4 per cent and 8.7 per cent, respectively, in July from the same month last year, primarily fuelled by lower-than-usual monsoons increasing the demand for the retail fuels among farmers who require them to run their irrigation machinery and tractors, among other things.

Petrol sales by Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) climbed 9.7 per cent to 3.45 million tonnes during July, compared with 3.14 million tonnes in the corresponding period a year ago. The volume was also 15.1 per cent higher than 2.99 million tonnes sold during July 2024 and 36.1 per cent above the level recorded in the same period of 2023.

Compared to June, however, petrol sales fell 1.1 per cent from 3.48 million tonnes. Diesel sales, a key indicator of economic activity in India, rose 10.7 per cent year-on-year to 7.12 million tonnes in July from 6.43 million tonnes a year earlier.

Diesel is India’s most widely used fuel, powering freight transport, agricultural machinery and irrigation. Below-normal monsoon rainfall boosted irrigation demand during the peak sowing season.

The volume sold in July was 11.5 per cent higher than in the corresponding period of 2024 and 12.7 per cent above the July 2023 consumption. On a month-on-month basis, diesel sales declined 9.2 per cent from 7.85 million tonnes in June.

Fuel sales typically moderate with the onset of the monsoon, which reduces demand for running agricultural irrigation pumps as well as slows vehicular movement. But this year, the monsoon rains arrived late, which led to farmers using diesel to run pumps to irrigate farms.

Month-on-month, sales in July remain lower because in June Holiday travel picks up due to school and college holidays.

Jet fuel (ATF) sales inched up by 2.9 per cent to 659,900 tonnes during July — volumes that were 2.3 per cent more than the consumption of 641,300 tonnes in July 2024 and 16.5 per cent more than 566,600 tonnes of July 2023. Month-on-month, the consumption fell 4.6 per cent from 691,700 tonnes of June. Liquefied petroleum gas (LPG) sales continued to fall, dropping 17.4 per cent to 2.37 million tonnes.

Industry officials said this was largely because some volumes have shifted to piped natural gas since the West Asia crisis.

LPG sales have been declining since the onset of the West Asia crisis disrupted supplies, leading to the imposition of consumption restrictions in sectors like hotels and restaurants.

The curbs were lifted last month, and sales saw an 8.6 per cent rise to 2.18 million tonnes consumed in June but were lower year-on-year as some industrial and commercial users are now using piped natural gas for their needs, they said.

The July LPG consumption was 13.3 per cent lower than 2.73 million tonnes of July 2024 and 1.1 per cent lower than 2.39 million tonnes of July 2023.