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Vehicle Sales Drive India’s Oil Demand in October

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Published on : Nov 17, 2015

The fuel demand in India reached a five month high in October owing to rising demand for vehicles before the festive season. This resulted in an increase in diesel and gasoline consumption. 

The demand for oil last month went up 17 per cent to reach 15.2 million metric tons from the previous year, the highest it has shot up since May, based on findings revealed by the Indian oil ministry’s Petroleum Planning and Analysis Cell. Use of diesel went up 16 per cent to reach 6.34 million tons while consumption of gasoline rose 14 per cent to settle at 1.85 million tons. 

The onset of the festive season resulted in car sales rising 22 per cent last month while industrial vehicular production went up 3.6 per cent in September from the previous year. Finance minister Arun Jaitley said last week that being the third largest economy in Asia, India can develop at a rate of 8 per cent to 10 per cent over the next few years. 

The demand for diesel, which accounts for around 42 per cent of the fossil fuel consumption in India, was driven by stronger construction activity, a weak base, and a monsoon that was lighter than normal, according to Energy Aspects, a London based energy consultant. Gasoline sales were aided by stronger car sales and increased driving in October, according to Energy Aspects. Gasoline is used a transportation fuel in vehicles. 

This year, India received the least amount of monsoon rainfall since 2009, which led to more power generation from diesel generators and lower than normal power from hydro plants. The increasing use of diesel in India is the complete opposite of what is happening in China, where users have been reducing consumption owing to slower manufacturing. The demand for diesel in China is likely to decline 5 per cent in the last quarter compared to a year earlier, as against an increase of 5 per cent for gasoline.