Fuel sales growth moderates in April as record prices dampen demand

ECB's Lane says first rate hike no big deal, wary of further moves

State-owned oil firms had on March 22 ended a 137-day hiatus in rate revision and began passing a USD 30 per barrel increase in cost of raw material (crude oil) during that period when five states including Uttar Pradesh went to polls.

India’s petrol and diesel sales development moderated in April while cooking gas LPG consumption fell as record high costs dented demand, preliminary industry data displayed on Sunday. Petrol deals development moderated to 2.1 percent in April when contrasted and a similar period in the preceding month, while diesel demand was practically level. Cooking gas LPG, which had reliably shown development in any event, during the pandemic time frame, saw a huge 9.1 percent month-on-month drop in consumption during April.

Petrol and diesel prices rose by Rs 10 per litre between March 22 and April 6 — the highest-ever increase during a 16-day period since fuel prices were deregulated two decades back.

On March 22, cooking gas prices too were hiked by Rs 50 per cylinder to Rs 949.50 — the highest-ever rate for the subsidised fuel.

The price increases moderated the consumption.

Petrol sales by state-owned fuel retailers, which control roughly 90 per cent of the market, at 2.58 million tonnes during April were nearly 20.4 per cent higher than the same period last year and 15.5 per cent higher than the period in 2019, preliminary industry data showed.

The consumption was, however, just 2.1 per cent more than the 2.52 million tonnes sales in March 2022.

Diesel, the most-used fuel in the country, saw sales jumping 13.3 per cent year-on-year to 6.69 million tonnes. This was 2.1 per cent higher than sales in April 2019. But this was just 0.3 per cent higher than 6.67 million tonnes consumption during March.

Petrol and diesel sales had risen 18 per cent and 23.7 per cent respectively in the first half of March when dealers and consumers hoarded fuel on price hike expectations. Diesel sales during March were the most in any month in the last two years and more than the total volume of diesel sold in April 2020 when the country was under a complete lockdown.

Industry sources said while there was a panic buying by individual vehicle owners in the first half of March, petrol pump dealers topped up not just their storage tanks but also any mobile browser or tanker truck they had. The dealers hoped to make a quick buck by buying fuel at a lower rate and selling at revised higher prices. As prices were raised, consumption fell.

Petrol and diesel prices hit the freeze button just as electioneering for five states including Uttar Pradesh picked up in early November 2021. The record 137-day freeze ended on March 22. Jet fuel (ATF) sales rose 28.3 per cent to 500,400 tonnes in April but were 29.2 per cent less than pre-COVID levels of 2019. They were, however, 5.1 per cent more than the sales in March 2022.

ATF sales are expected to pick up with the complete opening up of air travel. India went in for a complete lockdown, stopping flights, halting rail and road movements and shutting businesses, in the last week of March 2020 to contain the spread of coronavirus. The March 2020 period was near normal as COVID restrictions were just kicking in.

The government gave free LPG cylinders during 2020 to help poor fight the fallout of the stringent lockdown. This helped state oil firms register growth month after month even as other transport fuel saw severe demand contraction. But in April, LPG consumption fell 9.1 per cent month-on-month to 2.2 million tonnes. This was 5.1 per cent higher than April 2021.

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