First drop in India's petroleum products' consumption in ten months

India’s consumption of petroleum products dipped by a marginal one per cent in October over a year earlier, the first decline in 10 months.

Speculation over price reductions, drop in commercial vehicle sales and mining bans pulled down sales of diesel, the most consumed fuel, by a little over three per cent. This dip in diesel, 43 per cent of all petroleum products’ consumption, overshadowed the impact of a 10 per cent rise in petrol consumption and seven per cent rise in that of cooking gas (liquefied petroleum gas or LPG).

“Except for LPG, petrol, aviation turbine fuel and petcoke, all other products have recorded negative growth,” the petroleum ministry said.

The outlook for petroleum consumption looks positive over the next two years, the ministry said, as 88 infrastructure projects involving investment of Rs 2.8 lakh-crore have become operational over the past few months. “This investment has gone on stream in the power, steel, airports and oil & gas sectors,” it said.

Diesel consumption dropped to 5.4 million tonnes in October from 5.6 mt in the corresponding month last year. The shrinking differential between diesel and petrol prices have led to a shift in SUV consumers’ preference away from diesel. There was also a ban on coal mining in some states.

Petrol consumption grew 10 per cent in October, on the back of higher vehicular movement. The growth was less than the 22 per cent in September, as hopes of price cuts in line with global trends led dealers to maintain low inventories at retail outlets.

Also, a 2.5 per cent drop in passenger car sales aided the decline in growth. “The festive cheer, heavy discounts, extension of excise duty reduction till December and positive sentiment of the stable government has failed to push the sales of cars,” the ministry said. Total passenger vehicle sales dropped 7.5 per cent to 221,000 last month from a year before, according to data from the Society of Indian Automobile Manufacturers.

As for cooking gas, its consumption grew for a 13th month in a row, of 7.1 per cent in October and with a cumulative growth of 10.5 per cent for the seven months between between April, when the financial year began, and October. Subsidised consumption grew 15 per cent in the seven months as compared to 0.4 per cent growth in the same period last year.

“This is mainly due to release of 82 lakh (8.2 million) new connections and 50 lakh (five million) Double Bottle Connections during April-October and increase in the capping of subsidised cylinders,” the report said.

However, non-subsidised LPG sales dropped 10 per cent in October, the 13th straight month of a fall in volume and hinting at a large-scale diversion of the subsidised fuel to commercial establishments.