Why diesel matters

It should not be a surprise that diesel matters so much once you see how much the world depends on it: it is the biggest oil product of all.

This builds on the first article, Where India refines its oil, and where it burns it, which mapped India's refineries and followed a year of oil through the country. Diesel was the biggest fuel in that story too.

The world's biggest oil product

In 2024, the world used 101.4 million barrels of oil a day. Diesel and gasoil were 28 million of them, 27.6%, more than petrol at 25 million.

In Europe, where many cars run on diesel, it is 43% of all oil used. In North America, where cars run on petrol, it is 19%. India is at 33%, well above the world average. Worldwide, about half of all diesel is burned by trucks carrying freight, according to the International Energy Agency.

What India uses diesel for

India uses about 102.6 million tonnes of diesel a year, close to half of all the petroleum products it consumes (see India's oil balance in the first article). Trucks burn 55% of it. Add cars, buses, taxis, railways and three-wheelers, and transport takes 81%. Industry, farms, power generators and mobile towers share the rest.

Based on the data from fuel stations, trucks went from a third of diesel sales in 2012–13 to almost two-thirds in 2020–21. Agriculture's share fell from 14% to under 5%, as tractors and pumps took a smaller share and more farm pumps moved to grid and solar power. Diesel powered 58% of new passenger vehicles sold in 2012–13 and only 17% in 2020–21.

Where India burns it

Diesel use follows trade routes and industry. Maharashtra and Uttar Pradesh each use more than 11 million tonnes a year, and five states together use almost half of India's diesel.

Compare this with the refining capacity map: Gujarat holds 38% of India's refining capacity but uses 8% of its diesel, while Uttar Pradesh uses 11.5% of the diesel with 3% of the capacity. Diesel has to travel from the refineries on the coast to the trucks and farms inland.

Diesel and the economy

Through the 1990s India's diesel use rose almost exactly in step with its economy. Studies of the decades up to the 2000s found that every 1% of GDP growth came with about 1% more diesel.

That changed after 2000. By 2024 the economy had grown 4.3 times and diesel use 2.3 times: on average, every 10% of growth brought about 6% more diesel. Likely reasons: growth has leaned on services, which need less fuel; new cars have moved from diesel to petrol and CNG; and more freight runs on electrified railways. Diesel still rises with every year of growth, but it no longer keeps pace.

How diesel responds to price

Economists measure how strongly people cut back when a price rises with the price elasticity of demand: the percentage change in use when the price goes up 1%.

Across 76 emerging economies, a 10% rise in the diesel price cuts diesel use by only about 2.4%, and that is over several years, not overnight. In Europe and other rich countries, and in India's own history from 1970 to 2011, diesel responds less than petrol does. One study of India found no statistically significant price effect on diesel at all.

From an Indian perspective

After more than two years at about ₹87.67 a litre, the Delhi price of diesel rose in four steps in May 2026 to ₹95.20, up 8.6%. From June to August, India used 7.6% more diesel than a year earlier. Despite the rise in prices, demand did not fall, though the economy was growing at the same time.

As the first article showed in what it adds up to, India's refineries make more diesel than the country uses: about 116 million tonnes a year against 102.6 million used at home.

Sources and notes

World oil use by product: Energy Institute, Statistical Review of World Energy 2025 (data for 2024, in barrels a day; diesel and gasoil includes marine gasoil). India's diesel use by sector: PPAC, All-India study on sectoral demand for petrol and diesel, October 2020 to September 2021, a survey of about 3,000 fuel stations by CRISIL, covering retail and direct sales. Trucks' share of world diesel: IEA, The Future of Trucks (2017). Diesel use by state: PPAC, Oil and Gas Snapshot of States, Vol. 2026-27, Edition I (April to June 2026, multiplied by 12). Monthly diesel use: PPAC, domestic consumption of petroleum products (provisional). Delhi prices: PPAC, daily retail selling prices in metro cities. GDP: World Bank, constant 2015 US dollars.

Elasticities: Liddle and Huntington (2020), long-run estimates from panels of up to 118 countries, as summarised by Huntington and Liddle for the Stanford Energy Modeling Forum; Agrawal (2012), Institute of Economic Growth Working Paper 319, India 1970–2011; Ghosh (2010), Energy, India 1972–2006.