India’s fuel demand fell 6.1% in August compared with the same month last year. Consumption of fuel, a proxy for oil demand, totalled 15.75 million tonnes in August, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Tuesday. Sales of gasoline, or petrol, were 0.8% lower from a year earlier at 2.19 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales increased 11.8% to 2.06 million tonnes. Naphtha sales fell 7.6% to 1.06 million tonnes. Sales of bitumen, used for making roads, were up 8.5%. Fuel oil use fell 6.9%.
While India’s fuel demand grew by over 1% in July as consumption of diesel and petrol rose, government data showed. Fuel consumption in July totalled 15.8 million tonnes as compared to 15.63 million tonnes in the same month of 2016, data from the PPAC of the oil ministry showed. The growth was higher than the 0.4% recorded in June when consumption of industrial fuel had dipped.
Earlier this year, the government introduced dynamic fuel pricing on 16 June — a mechanism for revising retail fuel prices daily across the nation in conjunction with the change in the crude oil prices. Narendra Modi administration’s scheme ensured that the oil marketing companies do not feel the pinch of keeping fuel prices static for up to 15 days even if the crude oil starts rising rapidly, as was the earlier practice.
The price of petrol was under the government control when the crude oil was at its peak. Biting the bullet, the government deregulated the price of the fuel from its control in 2010, allowing the oil refining and marketing companies to set it in line with the market dynamics, especially crude oil prices.
The Indian basket of crude oil was at $132.47 per barrel at its peak in July 2008, according to the data from PPAC. Since then, the price has fallen by 65% to $46.56 per barrel in June 2017. At the same time, the price of retail petrol sold in Mumbai rose by 43% from Rs 55.04 in June 2008 to Rs 78.44 in June 2017.