Days after the Prime Minister openly asked citizens to reduce fuel consumption and avoid unnecessary travel, Kerala has reportedly imposed a limit on the amount of petrol and diesel that a person can buy. Customers can now only buy a maximum of 200 litres of diesel and petrol worth Rs 5000, in the South Indian state. Kerala has become the first state in the country to impose such limits on buyers. Interestingly, this does not indicate a national fuel shortage or large-scale supply crises.
According to a Mathrubhumi report, fuel outlets have been asked to restrict wholesale sales. At the time of writing, a litre of petrol costs Rs 107 in Kerala, while diesel price stands at Rs 95 per litre. According to the limits, a person can only buy 200 litres of diesel or Rs 5000 worth of petrol (approximately 46 litres).
This move is part of supply management measures and comes amid rising concerns over stock availability. As obvious, they would affect bulk buyers and logistics operators, and not regular individual customers.
Oil Marketing Companies (OMCs) supply fuel to bunks based on short-term demand cycles. According to reports, bunks are now receiving stock that would suffice for a few days, at a time. The recent replacement of the previous credit-based system with the advance payment system is a major reason behind this.
The aforementioned limits thus appear to have more to do with the transition to advance payment-based system than fuel shortage or supply crisis. Distributors have reportedly clarified that there is no official nationwide shortage of fuel or severe supply constraints. Logistical delays could, however, cause temporary disruptions.
Operators say that these limits would help in preventing sudden stock depletion during high-demand hours. Representatives from the Kerala State Petroleum Traders Association said that they would ensure continuous availability of fuel, and would thus benefit vehicle owners and commuters.
Kerala reportedly has around 2500 bunks, relying on regular tanker deliveries. These can range from 12,000 to 24,000 litres. In urban areas, bunks end up selling up to 10,000 litres of diesel per day. Smaller retail outlets, on the other hand, have to handle significantly smaller volumes.
The centre has already stated that India has adequate energy reserves- enough crude oil and natural gas stock for around two months. LPG reserves are expected to last for one and a half months. This reassurance first came after rumours of suspected fuel shortage created long queues at petrol bunks in some parts of India. That too was actually due to the transition to advance payment system.
Pressure has lately been building on the government to increase fuel prices in the country, as oil marketing companies have reportedly been facing massive losses due to the rising crude oil prices in international markets.
According to government estimates, state-run OMCs have lately been incurring losses of Rs 20 per litre on petrol and Rs 100 per litre on diesel. India hasn’t announced any major fuel price hike in the past four years, during which period OMCs have been offsetting losses with profits earned when crude prices declined.
The sustained spike in global crude prices catalysed by the West Asia war, has made this strategy less effective, and has been forcing authorities to announce a price hike. According to some reports, fuel prices could go up before May 15, 2026. Industry sources have reportedly been hinting the same. However, more recently, Oil Minister Hardeep Singh Puri ruled out the possibility of a sudden increase in fuel prices.