Even as the Union Government and oil marketing companies are claiming that all is fine and there is no shortage of petroleum products all over the country, transporters, and retail customers from various parts of India have reported short supply of diesel and petrol in the last few days.

While diesel shortages have been attributed to diversion to industrial use and inability of pump owners to secure assured supplies, the rationing of petrol is due to panic buying and resultant effect of pumps getting dry or in some cases pump owners hoarding to take advantage of price hike in the future, said people familiar with the situation.

“Members from various parts are reporting short supply of diesel which is hampering free movement of trucks. This is being caused by industrial customers buying from retail and pump owners limiting diesel to trucks,” said Abhishek Gupta, general secretary, All India Transporters Welfare Association. 

According to some transporters there are pockets where fuel supply is restricted, but the situation is yet to go out of hand.

“Primary reason is understood to be pump owners holding stocks in anticipation of price hikes and industrial demand is being fulfilled by retail where discount is available,” said a transporter.

There is a price difference of about ₹30 to ₹50 per liter between commercial/industrial and retail diesel.

There are many videos floating in the social media which shows long queues at petrol pumps and retail customers after waiting for hours are getting fuel worth ₹100 or ₹200 ok case of two wheelers and upto ₹2000 for four wheelers.

Several truckers were also seen complaining about lack of fuel availability or getting fuel worth only ₹5,000 at a time. This they said had slowed down traffic movement causing supply chain distribution. 

Some petrol and diesel dealers have flagged that oil marketing companies have stopped providing credit facility to dealers and this has created cash flow issues hindering supplies. Since the U.S. and Isreal started bombing in Iran and the Strait of Hormuz had been blocked, leading to escalation in crude oil prices, the oil marketing companies are reluctant to engage in completion among themselves to reduce the under recoveries.

“Earlier there was intense competition among oil marketing companies so they used to give credit of 3 to 4 days to dealers and this has been stopped since the first week of March, soon after the war broke out,” said Ravi Shinde, former president of Petrol Dealers Association, Mumbai. 

“This has created cash flow issues and dealers, who used to order two tankers a day, are now getting one on upfront payment. The situation gets aggravated on Saturdays and Sundays when the banking channel does not work to process payment,” he said.

According to pump owners when one pump goes dry due to unavailability of fuel, the pressure shifts to the nearly pump leading to long queues and shortages of supplies to retail customers.

Sometimes rumour mongering on social media on likely steep in hike prices was also causing in panic buying, said people familiar with the development.

Owning to the under recovery where in there is a loss of about ₹100 per liter of diesel, there is reluctance on the part of the oil marketing companies to sell more and they seem to on a conservation mode. Now that international crude oil has touched $113 a barrel, the alarm bell has started ringing.

Meanwhile prices of essential grocery products have gone up substantially adding to the woes of households.