Explained: How to read the drop in diesel consumption in November

Diesel consumption is a key indicator of economic activity since it is used not only as a transportation fuel but also for industrial and agricultural activity. We examine what this change reflects and if diesel sales are trending downwards again.

Diesel consumption in the first half of November fell 5% year-on-year after growing in October for the first time since before the Covid-19 pandemic related travel restrictions were imposed in March. Diesel consumption is a key indicator of economic activity since it is used not only as a transportation fuel but also for industrial and agricultural activity. We examine what this change reflects and if diesel sales are trending downwards again.

What has the trend of petrol and diesel consumption been since Covid-19 and related lockdowns?

The consumption of both diesel and petrol crashed when the government imposed travel restriction across the country on March 25 to curb the spread of Covid 19. Diesel and petrol consumption crashed by 56% and 60% respectively in April. The sales of both petrol and diesel recovered as lockdown restrictions were eased with diesel sales in June falling only 15% short of diesel sales in the year ago period. However, increased restrictions on movement imposed by state governments in July pushed back the recovery in diesel consumption which remained 20% below Pre-Covid levels in July and August. 📣 Express Explained is now on Telegram

Diesel consumption recovered to just 6% below year ago levels in September while petrol consumption grew year-on-year by 3.3 % with people increasingly opting for personal mobility even in cases where public transportation was available. Diesel sales posted a growth of 7.4% in October compared to the year ago period, marking October as the first month witnessing growth in diesel consumption since the national lockdown in March.

Does the fall in diesel consumption November indicate a reversal of the growth trend?

The fall in diesel consumption in the first half of November doesn’t indicate a reversal in the move of diesel consumption to pre-Covid levels, according to analysts, who noted that it may be a result of an unusual pattern of diesel consumption around the festive season. Experts noted that there is increased consumption of diesel in the weeks leading up to the festive season which then reduces during the festive period itself which may have brought down consumptions for early November.
An analyst who did not wish to be quoted said that this change was too minor to draw any long-term inferences and said that petrol and diesel consumption had both largely reached pre-Covid levels. He noted however that any consistent growth in diesel sales beyond current levels would require a general increase in economic activity in the country.

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