Caretaker Energy Minister Viset Choopiban suggested yesterday that the oil excise tax could be cut if fuel prices continue to hit new highs.

Viset said if refined oil prices spiked well above the cost of crude he would ask refiners to reduce their margins.

The government is looking for ways to pare back the highest fuel prices ever seen in the Kingdom.

A cut in excise taxes would be proposed, because the Oil Fund levy on every litre of fuel sold cannot be reduced. The Oil Fund is burdened with Bt65 billion of debt after being use to subsidise fuel prices for the past two years, which have also seen dramatic price rises.

The government is only prepared to lower the excise tax on diesel.

Octane-95 and octane-91 fuel is now subject to Bt3.68 per litre of excise tax, while the tax on diesel is Bt2.30.

Viset said fuel prices were now out of control, and the best way to ease the pain was to conserve fuel and promote the use of alternative energies. He pointed out that natural gas for vehicles (NGV) was 30 to 35-per-cent cheaper than regular fuel.

"Refined oil prices in Singapore have increased unusually, by [as much as] US$3-$4 [Bt113-Bt150] per barrel in a single day, as a result of tensions in Iran. If the increase in refined oil prices exceeds that of crude oil, we'll seek discussions with refineries and oil companies about possibly cutting refining margins," he said yesterday.

Amid nagging concerns that Iran, a key exporter, could cut supplies because of international pressure to modify its nuclear programme, global oil prices yesterday tested levels near $75 a barrel. Light, sweet crude for June delivery rose 14 cents to $74.75 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe, after touching $74.99 earlier in the day. An all-time intra-day peak of $75.35 was reached briefly on April 21.

Refined octane-95 prices in Singapore are hovering about $90.10 per barrel and diesel about $86.88.

As a result, Esso (Thailand), Bangchak Petroleum and Caltex (Thailand) are reportedly raising domestic prices by 50 satang per litre, effective today.

Last week, caretaker Finance Minister Thanong Bidaya also suggested reining in retail prices by reducing refining margins.

The Energy Ministry would have to ask for cooperation from oil refineries, as authorities cannot force them to cut their profits, he said. The move would be on a voluntary basis and would depend on whether the Energy Ministry wanted to seek help from private firms, he said.

However, caretaker Deputy Finance Minister Varathep Rattanakorn refused to comment yesterday on the possibility of excise-tax cuts floated by the Energy Ministry. The idea had not been mentioned to the Finance Ministry, he said.

On a proposed reduction of refining margins, Viset insisted the government would not intervene in oil price movements by demanding a cut in refining margins. Instead, it would discuss with oil traders and refineries what could be done.

The business community has raised concerns about the impact of rising fuel bills, amid ceaseless increases in global oil prices, fuelled in large by concerns about Iran and its determination to enrich uranium.

Theerapot Vajarabhai, chairman of Shell Corp (Thailand), said domestic retail fuel prices increased about 25 satang per litre for every $1 per barrel hike globally.

"It is very likely petrol prices will hit Bt30 per litre this month if global oil prices stay high," he said.