Diesel consumption expected to hit record highs

The current government is expected to increase infrastructure spending this year in view of the general election which in-turn is expected to take diesel consumption to record highs.

India is the world’s third largest oil user and thus plays a crucial role in driving global oil demand. Crude demand growth is expected to slip in 2019 because of slowing economic growth and India’s increased fuel consumption will help underpin oil and fuel prices.

Ministry of Petroleum data showed that the country consumed a record 6.9 million tonnes of diesel a month in 2018, or about 1.7 million barrels per day (bpd). India is expected to grow at 7.2 per cent in 2018/19 as against 6.7 per cent in the previous year. As per 2015 data of the International Organization of Motor Vehicle Manufacturers, which is the latest available, India has 22 cars per 1,000 people as against the United States which has 821 cars per 1,000 people.

During the general elections of 2014, monthly diesel sales were 6.2 million tonnes on average in polling months, 7 per cent higher than monthly average sales in 2014.

The implementation of GST has also aided diesel demand. India’s diesel expansion is likely to remain strong despite environmental concerns, particularly in the country’s capital Delhi. However, the country’s fuel standards have improved removing a substantial amount of sulphur from the diesel pool.