After falling month-on-month in July, petrol demand remained flat in August, while diesel consumption dropped by over 11 per cent in the first half of August.  

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As per preliminary industry data, while petrol consumption is almost flat in the first half of August, diesel - the most widely used fuel in the country - saw demand drop 11.2 per cent during August 1-15 to 2.82 million tonnes from 3.17 million tonnes in the same period of the previous month, reported news agency PTI.  

Diesel demand was, however, 32.8 per cent higher year-on-year, supported by strong economic growth and a relatively low baseline for the same period in 2021 when the second wave of COVID-19 had impacted the economy. 

Consumption of diesel was 58.2 per cent higher than the 1.78 million tonnes demand during August 1-15 in 2020. It was 23 per cent more than pre-COVID August 2019, the data showed. 
Petrol sales inched up 0.8 per cent to 1.29 million tonnes in the first half of August when compared to 1.28 million tonnes of consumption in the same period of the previous month. 

The consumption was 30.6 per cent higher than August 2021 and 43.4 per cent more than the first fortnight of August 2020. It was 36 per cent more than pre-COVID August 2019. 

What's causing the decline in petrol, diesel consumption?  

The main reason is the arrival of monsoon, which restricts mobility. Monsoon restricts mobility and demand from the farm sector, which uses diesel in irrigation pumps and trucking, also drops with the onset of rains. 

Explaining the rationale behind fall in demand, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that July and August are traditionally low consumption months for diesel and petrol and, therefore, the recent decline in demand is normal.   

"Since economic activity is gaining momentum fuel consumption can be expected to rise starting in September. Pick up in personal and commercial vehicles demand indicate recovery in consumption, going forward," he added.