India has regained 65% of its appetite for fuel and demand will reach nearly pre-pandemic levels next month as economic activities pick up pace after the government’s announcement of a stimulus package and staggered easing of Corona restrictions, oil minister Dharmendra Pradhan told TOI on Saturday.
“The world has seen an unprecedented erosion in fuel demand. Many countries saw refineries being shut down, plans being rescheduled. India has fared better in comparison. After the lockdown began (from March 25), fuel demand had dropped to 30-35% of the level seen in April 2019. Yet, major production capacities remained operational. Demand is back at 65% of the May 2019 level and will reach pre-Corona level in June,” Pradhan said.
This compares well with fuel consumption in China, the world’s second-largest oil consumer and the pandemic’s epicentre, reaching 90% of the pre-Corona level after losing 40% of the demand in February, as per an IHS Markit report.
A rebound in fuel demand indicates India is getting back to work and the world’s third-largest energy market is poised to regain its position as the global demand centre. “The pattern (the pace of consumption growth) may change. Two-wheelers will be back as an affordable option to maintain social distance and safety while commuting. Same with small cars. This will give impetus to petrol. Rising highway traffic, resumption of train service and farm sector activities fill push diesel sales. Aviation fuel will get a boost once flights resume from May 25,” he said.
Latest industry data show petrol sales rising 7.5% and diesel sales jumping 72% in May following the government’s move to ease lockdown curbs to allow from April 20. Jet fuel sales grew 6-7% and LPG 4% during this period as only select cargo and repatriation flights took to the skies and domestic cooking fuel demand tapered off after the initial panic-buying triggered by the lockdown and commercial consumption was yet to return.
Asked about current pump prices corresponding to $100 oil price and consumers not getting the benefit of historically low oil prices because of the government raising fuel taxes by Rs 13 and Rs 16 a litre of petrol and diesel, respectively, Pradhan said it did not put the burden on consumers and will raise resources for welfare schemes, stimulus package and infrastructure.
“Pump prices have remained steady since they were last changed reduced when was $65/barrel. So it is wrong to say pump prices reflect oil at $100. It is pointless at such times to revise prices, especially when demand is gone. What do you do when things are bad. You tighten the purse strings. Focus on bare essentials. This is what all of us have seen our mother do. This (tax hike) is the same. Where will the money come from? We have to look after the poor, stimulate the economy. Build infrastructure. That is what the money will be used for.”Share This