Extreme heat melts diesel demand, sales drop 4% in June

India's diesel demand slumped in June as extreme heat conditions in parts of the country curtailed travel, preliminary data of state-owned firms showed on Monday. Fuel sales, which traditionally surge during elections, have defied the trend this year, falling month after month.

And the decline has now extended even after the end of the general elections.

Petrol sales of three state-owned firms, which control 90 per cent of the fuel market, at 1.42 million tonnes in the first half of June was almost the same as 1.41 million tonnes of fuel consumed in the same period last year. Month-on-month consumption dropped 4.6 per cent.

Diesel sales dropped 3.9 per cent to 3.95 million tonnes during June 1 to 15 when compared with the year-ago period. The demand for the nation's most consumed fuel had fallen 2.3 per cent in April and 2.7 per cent in March. In May it fell 1.1 per cent.

Besides electioneering, the summer harvest season as also the scorching summer that increases the demand for air conditioning in cars, should have led to a rise in fuel consumption. However, this year has defied the trend.

Petrol and diesel prices were reduced by Rs 2 per litre in mid-March, ending a nearly two-year-long hiatus in rate revision, which should have also propelled sales.

Month-on-month petrol sales fell 3.6 per cent compared to 1.47 million tonnes of consumption during May 1-15. Diesel demand was flat month-on-month against 3.54 million tonnes in the first half of May.

Diesel is India's most consumed fuel, accounting for almost 40 per cent of all petroleum product consumption. The transport sector accounts for 70 per cent of all diesel sales in the country. It is also the predominant fuel used in agriculture sectors, including in harvesters and tractors.

Consumption of petrol during June 1-15 was 4.6 per cent lower than in the first fortnight of June 2022, and 28.1 per cent more than in the Covid-marred same period of 2020.

Diesel demand slumped 10.5 per cent over June 1-15, 2022, and 14 per cent higher compared to June 1-15, 2020.

Jet fuel (ATF) sales rose 2.3 per cent year-on-year to 331,000 tonnes during June 1-15, 2024. But, this was 4.5 per cent lower month-on-month when compared to 346,500 tonnes in May 1-15, the data showed.

Like petrol and diesel, ATF demand, too, is now firmly above pre-Covid levels.

ATF consumption was 10.1 per cent more than during June 1-15, 2022, and 6.1 per cent more than in June 1-15, 2020, as per the data.

Cooking gas LPG sales were up 0.1 per cent year-on-year to 1.24 million tonnes in June 1-15, 2024. LPG consumption dropped 0.9 per cent as compared to June 1-15, 2022 and was 32 per cent more than June 1-15, 2020.

Month-on-month, LPG demand fell 5.2 per cent against 1.3 million tonnes consumption during May 1-15, the data added.