Economy

Diesel drives petroleum product sales in 2011-12

Updated on: May 23, 2012
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Diesel sales accounted for much of the spurt in consumption of petroleum products in 2011-12.

Sales of this heavily subsidised fuel spiked by 10.3 per cent during the year, outpacing the 4.9 per cent increase in all petroleum, oil and lubricant products, according to the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry.

As consumption of petroleum products rose by 6.2 million tonnes in 2011-12, over two-thirds of this increase was accounted for by diesel.

The trend of higher diesel consumption was heightened in March 2012, when the transport fuel constituted about 85 per cent of total volume growth.

Deregulation

The sharp rise came amid significant widening of the gap between diesel and petrol prices. Petrol prices were deregulated in June 2010.

The analysis mentions increased preference for diesel-powered vehicles as one of the reasons for the spike in diesel consumption. The . In addition, 16 per cent growth in commercial vehicle sales in 2011-12 also pushed up diesel sales.

Diesel is also increasingly being used for power generation purposes amid a serious electricity deficit in the country. A shortfall in production of natural gas from Reliance Industries' D-6 block in the Eastern Offshore has contributed to this trend.

Substitution of furnace oil with diesel by industrial units due to the considerable cost advantage added to the diesel sales.

In contrast, petrol consumption growth was more moderate at 6.1 per cent in the second half of 2011-12, despite a 11.5 per cent surge in March amid expectations of a price hike. The lower growth was primarily on account of the high price of the fuel vis-à-vis diesel.

Aviation turbine fuel sales recorded a decline of 0.1 per cent in March after a gap of 30 months, highlighting the slowdown in the aviation sector.

The slowdown in monthly growth in the second half of 2011-12 highlights the sector's problems. However, consumption during the entire year rose by 9 per cent.

Liquefied petroleum gas (LPG) sales also slowed down in 2011-12. However, this was not due to demand, but on account of the strike by bulk LPG transporters, which disrupted supply in the Southern and Western regions.

LPG recorded its second lowest month growth this year in March, at 1.5 per cent.

A slowdown in manufacturing as also the option of using cheaper diesel, resulted in the use of industrial fuels such as furnace oil and low sulphur heavy stock (FO/LSHS) registering a decline of 14.9 per cent in 2011-12.

This was the lowest consumption of FO/LSHS in the last twenty years, with the sales volume dipping to 9.1 million tonnes. Sales declined throughout the year.

Naphtha, on the other hand, recorded 4.8 per cent growth in 2011-12, with consumption rising by 19.5 per cent in March.

The growth was entirely on account of the petrochemical sector. Bitumen sales registered marginal growth of 1.5 per cent in 2011-12, an indicator of lacklustre road construction activity.

>Arvind.jayaram@thehindu.co.in

Published on November 15, 2017

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