Petrol, Petrol & Diesel, Stories

Data: Overall Consumption of Petroleum products down by 9% in 2021-22, first such decrease in over 24 years


Data from the PPAC indicates that the consumption of petroleum products, which is an indicator of economic activity in the country, is down by 9% in 2020-21 compared to 2019-20 figures. This is the first time since 1997-98 that the consumption has decreased compared to the previous year.

The consumption of petroleum products has an important bearing on the economy of the country. Petroleum products are a key input in many industries and also drives the movement of goods & people across the country.  Hence the trend in their consumption is a reflection of the respective industries, and the performance of the economy as a whole. 

In view of the COVID-19 pandemic, we had earlier analysed the fall in the consumption of petroleum products and also identified the improvement in the trends during the later quarters of 2020-21. As the financial year, 2020-21 has just ended, we take a look at the trends in consumption of petroleum products in 2020-21 compared to the previous years and also analyse the trends in recent months. Petroleum products include – Motor Spirit (Petrol), Diesel, Petroleum Coke, LPG, Bitumen, Naphtha, Lubricants, etc.  This analysis is based on the data provided by Petroleum Planning & Analysis Cell (PPAC). 

Annual Consumption of Petroleum Products in 2020-21 at 2016-17 levels 

The consumption of petroleum products took a hit during the first two quarters of 2020-21 due to the implementation of lockdown measures and the subsequent slowdown. This has impacted not only the consumption of petroleum products like LPG, Petrol, etc. which are used mostly for domestic consumption but also diesel, coke, bitumen, etc. that are used for commercial/industrial purposes.  However, since the relaxation of the lockdown measures, there has been an uptick in consumption, and recovery was observed in the later quarters. 

At the same time, this recovery was not enough to surpass the consumption reported in 2019-20 as the annual figures for 2020-21 show total consumption of petroleum products at 1,946 lakh metric tons (LMT), less than 2141 LMT reported in 2019-20. When the data for the previous 24 years i.e., 1997-2021 is considered, this is the first time that the consumption of petroleum products in a particular year was less than that of the previous year. In fact, the annual petrol consumption in 2020-21 is at the levels of 2016-17, where in it was 1,945 LMT.

Consumption of Petrol & LPG increased in Q4 compared to last year while the consumption of other products is lower 

In the review of the earlier quarters, it was observed that while there has been a revival in the consumption of Diesel (HSD) post-lockdown, the consumption was lower during the same period last year.

This trend continued even during the last quarter of 2020-21. Around 197 LMT of diesel was consumed during Q4 of 2020-21, compared to nearly 206 LMT of Diesel during the last quarter of 2019-20. The higher consumption in March 2021 i.e., 72.23 LMT compared to 56.59 LMT in March 2020 is a major reason for covering up the deficit of the quarter in comparison to last year. 

Meanwhile, the quarterly consumption of Petrol (Motor Spirit) during Q4 of 2020-21 is higher than that of 2019-20’s last quarter. In Q4 of 2019-20, the consumption was 71.23 LMT while it increased to 78.14 LMT during the same period in 2020-21. As in the case of Diesel, the larger increase of consumption during March 2021 (27.39 LMT) compared to March 2020 (21.55 LMT) can be attributed to the higher number during Q4 of 2020-21 compared to 2019-20. 

Both Diesel & Petrol are used for vehicular transport – commercial as well as personal and are reflective of the economic activity. In spite of a slowdown in the initial months of the quarter, the increase in consumption during March 2021 is an encouraging sign. 

  • The consumption of LPG during Q4 of 2020-21 was 70.2 LMT, higher than 68.34 LMT during Q4 of 2019-20. The consumption figures for LPG include both domestic as well as commercial LPG. Based on this information, it cannot be ascertained if the domestic consumption has increased or there is a higher demand in the commercial sector post relaxation of the lockdown. 
  • Meanwhile, Petroleum Coke, Naphtha, Bitumen, etc. which are used for industrial and commercial purposes have lower consumption in Q4 of 2020-21 compared to the same period last year. This trend could mean that industrial & commercial activities are yet to get back to earlier levels.  
  • The consumption of ATF (Aviation Turbine Fuel) in Q4 of 2020-21 was 13.5 LMT compared to 19.1 LMT during the same quarter last year. Quarter on quarter, the consumption of ATF has been lower compared to the previous year. However, there has been a gradual increase observed over the year. This is directly attributable to the slowdown in the aviation sector which has seen severe restrictions in the light of the pandemic. While the consumption is yet to reach the pre-pandemic levels, there is a positive increasing trend in the consumption and points towards an increase in travel & tourism. 

Increase in Petrol & Diesel prices could have also impacted Consumption 

At the end of 2020-21 i.e. on March 2021, the price for one litre of Petrol in Delhi as per the information of PPAC was Rs. 90.56. On the same day, the previous year i.e., 31 March 2020, the petrol price was Rs. 69.59 in Delhi.  The prices vary slightly across the cities. For sake of analysis, we have considered the prices in Delhi. 

Even in the case of Diesel, the price of one litre of Diesel as of 31 March 2021 was Rs. 80.87, while on 31 March 2020, it was Rs. 62.29. The price rise in the case of both Petrol & Diesel indicates a phenomenal one-year increase. Comparatively, on 31 March 2019, the price of Petrol & Diesel in Delhi was Rs. 72.86 and Rs. 66.4 respectively. 

Analysis of the petrol prices over the 15-month period i.e., January 2020 to March 2021 shows that the, after the spike in petrol price during June 2020, there has been a continuous increase in the Petrol prices since December’2020. The prices started to reduce ever so slightly only since the beginning of March 2021. The consumption data also correlates with this trend wherein there was lower consumption of petrol during December-February’2021, with an increase in consumption during March’21, when the prices have slightly reduced. 

The same trend can be observed in the case of diesel prices. While the change in Diesel pricing has been volatile in Delhi, the trends in other Cities indicate a higher consistent increase of prices from December 2020 only to reduce slightly during March 2021. While there could be other factors which influence the consumption of petrol/diesel, the prices do seem to have had an impact on the demand for these fuels. 

Still early days to predict the Consumption pattern in 2021-22

India is currently going through the second wave of COVID-19 infection spread, which is much faster & widespread than the first. The lockdown imposed during the first wave in 2020 had an impact on the movement of the people & vehicles as well as on the economic activity, among others. 

We are still not sure of any similar nationwide restriction as yet in the light of the second wave. However, few of the states have come up with local restrictions & guidelines that restrict the movement as well as economic activity. People have also begun self-restricting their movement. All these could have a bearing on the consumption of fuel in the months to come. 

OPEC’s Monthly Oil Market Report, predicts an improved economic situation in 2021-22 and thereby an increased demand for fuel. However, the direction of the second wave and the subsequent government actions would have a huge bearing on the demand. It is still early days to predict the consumption pattern for 2021-22. 


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