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Old 6th December 2019, 12:01   #1
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Lower demand for diesel fuel in India

According to a media report, the demand for diesel in India is falling. Some of the reasons for this include passenger car buyers' preference for petrol vehicles, increased efficiency of trucks and solar powered pumps replacing diesel-powered units.

Additionally, due to the extended monsoon in 2019, rural demand was also very low. Flooding also restricted mining, construction and freight movement across India. Industrial output has also fallen at the fastest pace in more than 6 years, leading to lesser demand for power, which is directly proportional to consumption of the fuel. In terms of freight movements, the new GST laws have also allowed 10-15% higher loads thereby reducing the fuel needed for transport.

Diesel accounts for 40% of the total fuel refined in India. To tackle this slowdown, oil companies are increasing exports. The state owned firms - IOCL, BPCL and HPCL, are also planning to convert some of the excess diesel capacity to petrochemical production.

Lower demand for diesel fuel in India-mghector29.jpg

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Old 6th December 2019, 12:17   #2
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Re: Lower demand for diesel fuel in India

This trend seem to be temporary with the ambiguity of automobile industry.

With regards to passenger cars, I see the below reasons why Diesel is not a preferred fuel anymore:

1. Difference between Petrol and Diesel is reducing
2. Traffic, bad roads and uncertainty making private buyers shy away from buying new cars
3. Most petrol powered cars now give respectable mileage so the need for diesel is all the more lesser
4. Consideration towards environment has increased
5. Government laws for Diesel car's ownership longevity & BS6 norms
6. Turbo charged petrol engines are been introduced by most brands

Diesel fuel car sales will see a dropping trend for the next few years especially with BS6 norms.
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Old 7th December 2019, 10:23   #3
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Is it too much to expect diesel price to fall considering supply is more than the demand ?
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Old 7th December 2019, 12:09   #4
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Re: Lower demand for diesel fuel in India

This may be the reason why the price for diesel has decreased or remained stable over the past one month. The price gap between the two fuels was Rs.4 a month ago, and its been widening, as of today, Diesel is cheaper by almost 8 Rupees.

The lower demand for diesel may not be due to the automobile industry, instead it may be due to the decreased power consumption due to economic slowdown.
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Old 7th December 2019, 12:59   #5
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Re: Lower demand for diesel fuel in India

Quote:
Originally Posted by blackwasp View Post
According to a media report, the demand for diesel in India is falling. Some of the reasons for this include passenger car buyers' preference for petrol vehicles, increased efficiency of trucks and solar powered pumps replacing diesel-powered units.
I don't think people's preference for petrol cars can have a lowering of demand for diesel. It can lower the growth rate of diesel demand but cannot cause existing demand to fall. Someone who has a diesel car won't stop driving.

The diesel fuel demand for personal car transportation in any case will be miniscule compared to the overall diesel consumption.

The way I see it, it is the disastrous situation in our economy in every sector that is causing the demand to fall. With all the negative data about consumer consumption and demand this is bound to happen. More so when the govt refuse to acknowledge it.
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Old 7th December 2019, 13:24   #6
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Re: Lower demand for diesel fuel in India

This is totally to be expected. With BS6 Diesels face the biggest challenge to comply. Also, after the last fiasco many of us will avoid the VW stable.

One must add that the low PM end was unknown when the state tried to push Diesel hard.
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Old 9th December 2019, 07:41   #7
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Re: Lower demand for diesel fuel in India

Trucks & buses account for ~40% of diesel consumption in India (source). They're using lesser diesel due to better highways (hence, increased FE) and more efficient new models. 24% is by cars and there too, consumption has fallen due to the move to petrol models. I think it's going to go even lower once BS6 kicks in, many diesel models are discontinued & the premium goes higher for those cars still around.

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13.15% of Diesel Consumed by private cars and UVs, 8.94% by commercial cars & UVs and 6.39% by 3-wheelers; Trucks account for 28.25%, Buses 9.55% and Railways about 3.24%
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Old 9th December 2019, 08:14   #8
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Re: Lower demand for diesel fuel in India

Trucks are probably the biggest contributor as already mentioned above but I disagree with better highways comment. I don’t tend to believe that highways are dramatically better than last year (if not worse) that has lead to a dip in fuel consumption. Better FE of new trucks is true but perhaps a weak factor because the good old trucks are still the majority.

So IMO what has really changed is the overall slowdown in economic activity. The logistics are down. Overall industrial production has slowed down.
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Old 10th December 2019, 19:02   #9
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Re: Lower demand for diesel fuel in India

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Originally Posted by Thermodynamics View Post
I don’t tend to believe that highways are dramatically better than last year (if not worse) that has lead to a dip in fuel consumption.
By saying Highways are better, probably he meant the flow of traffic in Highways especially for Trucks has got better. Post GST it is said that travel time for trucks has reduced by half. Naturally the fuel spent would also come down (Less idling for instance)

For further reading :
https://www.thehindubusinessline.com...le27428804.ece
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Old 13th December 2019, 15:16   #10
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Re: Lower demand for diesel fuel in India

I feel that the economic slow is the major factor here. Indian railways freight earning were decreased by a margin of Rs.3900 crores. Similar effects will also be there in case of trucks as well.

https://m.economictimes.com/industry...w/71774596.cms

Last edited by anb : 13th December 2019 at 15:17.
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Old 15th December 2019, 11:06   #11
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Re: Lower demand for diesel fuel in India

Quote:
Originally Posted by GTO View Post
Trucks & buses account for ~40% of diesel consumption in India (source). They're using lesser diesel due to better highways (hence, increased FE) and more efficient new models. 24% is by cars and there too, consumption has fallen due to the move to petrol models.
Hi, with increased FEs, will the effect be so much that we will be compelled to export diesel ? Our population graph is also has a positive gradient. Why the supply graph is not following it ?
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Old 17th December 2019, 04:07   #12
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Re: Lower demand for diesel fuel in India

Over the last 2 years, I've seen electricity supply improve in my village and this has reduced reliance on generators to power agricultural equipment. Some rural and urban areas have more reliable electricity supply.

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Originally Posted by GTO View Post
Trucks & buses account for ~40% of diesel consumption in India...
I'm not sure how much new highways helps, but lack of check posts due to GST has definitely made life better for truckers while reducing graft in our system.
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Old 18th December 2019, 08:04   #13
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Re: Lower demand for diesel fuel in India

Our economy has most probably been in recession for the past 6 months. Especially the auto sector. Truck fares are at their lowest ever.
I think this must be the main reason behind less diesel selling.
Also car owners are also ditching diesel due to reduced price difference over petrol.
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