Fuel sales slip in July as monsoon dampens demand

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NEW DELHI: India’s diesel consumption fell 13% and petrol sales slipped 5% in July sequentially from a month ago in spite of a sharp uptick in automotive sales as monsoon dampened demand by reducing farm sector offtake and impacting inter-state movement of goods and passengers in several parts of the country.
But the good news for refiners and fuel retailers is that the consumption of both fuels remained well above the pre-pandemic levels, underlining the seasonality of the dip.
According to industry data, diesel sales in July were 5% and petrol sales 16% higher than the same month of 2019. Compared to July 2021, diesel and petrol consumption was up 17.7% and 12%, respectively.
Sequentially, jet fuel sales suffered a marginal dip of 1% in July but was 79% more than July 2021 on tailwind provided by continued momentum in holiday season travel. Compared to July 2019, however, sales were down 14%.
LPG consumption, mostly used as household cooking gas, jumped 8.7% sequentially and 11.9% from July 2019. Sequentially, the growth in consumption was a modest 4% over June.
Diesel and petrol sales had jumped 35% and 28.9%, respectively, in June on the back of a surge in holiday travel and demand from the farm sector. Sequentially too, June diesel sales had shown a gain of 11% over May and petrol 3%.
Amid such sharp uptick in demand, migration of bulk consumers to retail outlets due to a wide price differential because of a freeze on petrol and diesel rates had led to shortages in several states during June. As private refiners starved their outlets of products to cut losses, the government expanded USO (universal service obligation) to force them to maintain pump operations and later slapped export tax.
Fuel sales typically fall during the monsoon as rains lower farm sector offtake, disrupts infrastructure construction work and inter-state freight and passenger movement in many parts of the country.

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