High fuel prices restrain India’s fuel demand in April 2022

India’s petrol and diesel sales growth moderated in April while cooking gas LPG consumption fell as record high prices dented demand, preliminary industry data showed.

Petrol sales growth moderated to 2.1 per cent in April when compared with the same period in the preceding month, while diesel demand was almost flat. Cooking gas LPG, which had consistently shown growth even during the pandemic period, saw a massive 9.1 per cent month-on-month drop in consumption during April.

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

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.

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