Bangchak Petroleum is pushing for an urgent increase in retail oil prices in the face of a renewed spike in the global cost of crude, which could plunge its retail oil business into an operating loss.

President Anusorn Sangnimnuan said yesterday that the finished petrol price in Singapore had edged up US$0.83 to $92 (Bt3,179) per barrel while finished diesel rose 60-70 cents to nearly $84, on concerns over oil supplies as well as geopolitical tensions in Nigeria and Iran. "This week retail oil prices need to be lifted by 40 satang per litre, or retailers will suffer greatly. Right now, the petrol marketing margin is only 30 satang per litre while diesel is only 70 satang," he said, while admitting that any increase depends heavily on large players, particularly PTT.

PTT said on Friday it would consider a hike after trying to keep a lid on prices for as long as possible to cushion the shock on the commuting public. That policy has upset other retailers who have to follow its lead, but any hike in prices could create dissatisfaction among the greater public who view the hugely profitable state enterprise as having a moral obligation to help consumers.

If global demand and supply keep fluctuating, retail petrol prices are likely to go up Bt1-Bt2 per litre in one or two months, as demand in the US picks up during the summer vacation period, Anusorn said.

However, the retail price should not exceed Bt35 per litre, as such a level would imply a finished petrol price in Singapore exceeding $100 a barrel.

Anusorn said the government should let the market mechanism play its role in setting pump prices, as most petrol users are individuals. If prices reflect market levels, motorists would be encouraged to switch to cheaper alternative fuels.

Bangchak has seen its 95-gasohol sales expand 6-7 per cent by volume from last year, partly due to a switch from 91-octane petrol. Sales of 91 gasohol have also increased 4-5 per cent. Anusorn said that if the government will not scrap the countrywide sale of 95-octane petrol in the near future, it should ask for cooperation from oil retailers to cut down their volume. That should allow the gasohol market to expand more aggressively.

Squeezed between steadily rising oil prices and delays in increasing retail prices, Bangchak is expected to lose Bt500 million from its retail oil business, the same amount as last year, he added.

Helping the company would be good returns from its refining business. With average refining margins expected at $3-$4 per barrel - against $3 last year - the company should enjoy a profit of Bt2 billion, as expected, he said.