He said oil companies here were unable to raise their retail prices in line with world oil prices, and the obvious affects could be seen in the lower number of newly opened fuel stations and new oil-related products.

Some companies have closed stations in the provinces because of low returns, he said.

"In the short term, Shell has to compete with its rivals to maintain its market share. But in the long term, it needs time to wait and see," Thiraphot told Kom Chad Leuk. "In the long term, it will not be only Shell [reconsidering its investment plans], but also others."

Thiraphot said oil companies had tried to cap their retail prices as low as possible. However, prices that are distorted against world prices will last for only a short time, as oil prices are tending upwards rather than downwards.

"Currently, domestic retail prices are slightly distorted. If they were raised relative to world prices, they should be Bt1 or Bt1.50 per litre higher than present. But they should not exceed Bt30 per litre," he said.

He said that Shell's consideration of increasing its retail prices would depend mainly on the direction taken by other large oil companies because the company does not want to lose its market share.

His comments follow an outcry in the oil industry about companies being under pressure from PTT Plc to keep their prices low. Immediately after the spike in world prices, oil companies moved to raise retail prices, only to see their attempts foiled by a "no-move policy" on the part of PTT.

Even with their marketing fees in the red, oil company sources claim nobody dares raise retail prices to recoup their losses if PTT does not agree to follow suit. Some said this situation had contributed to current diesel shortages because oil companies did not want to import pricey diesel for sale at a lower price in Thailand.

PTT's senior executive vice president for its oil business, Chaiwat Choorit, admitted yesterday that all oil firms had shouldered a higher cost by avoiding higher retail prices during the Songkran festival.

This translates into a deficit of 30 to 40 satang per litre in the marketing margin for all types of oil.

However, he argued that any increase in oil prices should depend on each company's consideration, because oil trading is carried out on a free-market basis.

"PTT has not raised its retail prices because it has to take care of society. If we cannot bear the higher cost, we will have to increase our prices," Chaiwat said.

"PTT has not been commanded by the government to cap the prices," he said. "The main reason PTT has not raised its prices is that we have revenues from non-oil businesses. This allows us to operate our oil business under a low marketing margin."