India’s oil product consumption up in June by 7.2% year-on-year

Consumption of refined oil products in India went up by 7.2% in June to 13 million tons, compared to 12.13 million tons in the same month a year earlier. The increase was attributed to the strong demand for diesel from the transportation sector, and the weak monsoon rains which prompted farmers to use diesel-powered irrigation pumps. To keep inflation in check, the government has maintained a tight control over diesel fuel prices, which has resulted in a surge in demand for diesel fuel and diesel-powered vehicles. Economists have expressed concern over the “dieselization” of India because the government has to extend its subsidy on diesel sales, which results in a bigger fiscal deficit. Diesel consumption in June of this year went up by 13.7% to 6.08 million tons, compared to the same month in 2011. The Petroleum Planning & Analysis Cell (PPAC), the data analysis unit of India’s federal oil ministry, said that diesel demand will continue to rise unless the government raises its retail price. (July 26, 2012)