Higher sales, Higher demand; Cars and fuel consumption moving in tandem
The increase in vehicle sales during the summer months has led to a rise in demand for fuel in the market. Consequently, there has been a surge in both commodities, as they are interdependent on each other.
As India embraces the dawn of electric vehicles and endeavours to foster domestic manufacturing, the traditional automobile sector also experiences a swift expansion. Sales of cars and the demand for petrol have surged in tandem, highlighting their intrinsic interdependence. As these two commodities are interdependent, the demand and supply are directly proportional to each other.
In April, the consumption of petrol increased by 13.8% YoY compared to the previous year, as per preliminary data released by the oil ministry. Conversely, diesel sales saw a much smaller rise of just 1% during the same period. There was also 8.4% increase in sales of aviation turbine fuel and 12% rise in sales of liquefied petroleum gas (LPG).
Provisional data obtained from state-run companies revealed a 12.3% increase in petrol sales by state-run fuel retailers. However, this growth rate is slightly lower than the overall industry increase of 14%. This discrepancy suggests that private players in the market have expanded their market share.
Diesel sales by state-run companies experienced a decline of 2.3%, contrasting with the modest 1% increase observed for the industry as a whole. Conversely, sales of aviation turbine fuel (ATF) and liquefied petroleum gas (LPG) by state-run companies expanded by 7% and 12%, respectively, during the same period.
The increase in petrol demand can be attributed to several factors. Growing vehicle sales has driven up the demand for petrol. In India, the majority of passenger vehicles currently run on petrol, contributing significantly. The onset of summer typically leads to higher travel rates, elevating petrol consumption as people embark on vacations and travel more frequently.
The ongoing general election also plays a role in bolstering petrol demand. Campaigning activities associated with elections result in increased mobility, as political parties and individuals travel extensively across the country. This heightened mobility directly contributes to higher petrol consumption.
Diesel is primarily utilized by long-haul transporters, farmers, and miners. These sectors rely heavily on diesel-powered vehicles and machinery for transportation and operations. While there was a modest increase in diesel sales, its demand remains stable due to its indispensable role in these sectors. Also the surge in air traffic, possibly due to increased travel and economic activity, contributed to higher consumption of jet fuel. Lots of people choose air travel and as air industries are relying on air transportation expand, the demand for jet fuel naturally rises, positively impacting its consumption levels.