Petrol, diesel price gap narrows to just 36 paise; consumption picks up

Though OMCs raised prices, they are seeing demand recovery in June at 85% of what it was in the same month last year

Fuel prices continued to pinch pockets of the common man for the 17th consecutive day on Tuesday, with the price difference between petrol and diesel narrowing down to a mere 36 paise. Though oil marketing companies (OMC) raised prices, they are seeing a demand recovery for petrol and diesel in June at 85 per cent of what it was in the same month last year.  

On Tuesday, price of petrol in Delhi was at Rs 79.76 a litre while diesel was at Rs 79.40 a  litre, cheaper by only 36 paise. In the last 17 days, petrol price increased by Rs 8.5 a litre and diesel by Rs 9.77 a litre. This was after a period of 83 days when there was no price revision by the OMCs during the lockdown. The prices of petrol in Mumbai was Rs 86.54 a litre while diesel was at Rs 77.76 a litre.

The result of this hike was seen in the marketing margins of the companies. 

“By the end of last week, gross marketing margin, at 15-day average prices, was Rs 2.9 a litre in case of diesel and Rs 3.7 a litre in case of petrol – versus a historical average of Rs 2.5 a litre on these fuels,” said a Mumbai-based analyst.

However, consumption seems to have come out of the lull witnessed in April and May. “We were 40 per cent of normal demand in April. By mid-May, it came to around 70 per cent. Now, fuel demand is around 85 per cent of a normal June month. In gasoline, it is slightly on the higher side at around 90 per cent of a normal June month,” said R Ramachandran, director, refineries, at Bharat Petroleum (BPCL).

Consumption of petroleum products during May 2020 was 14.6 million tonnes (MT) against 19.1 MT in May last year. May 2020 registered an overall fall of 23.3 per cent compared to May 2019, mainly due to some restrictions that still remained in the lockdown, said a report by the Petroleum Planning and Analysis Cell (PPAC).

Despite an increase in mobility and economic activities, petrol consumption fell 35.4 per cent in May 2020 with sales of 1.8 MT compared to 2.7 MT during the same month in 2019. On the other hand, diesel sales fell 29.4 per cent, with sales of 5.5 MT in May compared to 7.8 MT in May 2019. As the mobility improved in May compared to the previous month, consumption in May rose by 69.1 per cent compared to April, the report said.