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Published on November 16, 2007

Household living costs are set to increase marginally as the price of cooking gas has floated up by Bt1 to Bt2 a kilogram.

But manufacturers have been warned not to seek retail price increases because the latest gas prices would have a minimal impact on their production costs.

Internal Trade Department director-general Yanyong Phuangrach said yesterday a one-dish meal would cost 3-4 satang more to make. Cabbies would have to cover the additional fuel expense of Bt40 a day. Some products, such as aerosols and pesticides, that are manufactured with liquefied petroleum gas (LPG), known as cooking gas, would see a higher cost of 8-10 satang per bottle.

Households account for 55 per cent of total LPG consumption, while taxis make up 25 per cent and industry the remaining 20 per cent.

The department revealed the results of its analysis of the effects of eliminating the cooking gas subsidy after the Energy Ministry hinted the price could shoot up by at least Bt1.29, which is the subsidy paid by the Oil Fund to keep the LPG price down.

The increase could be even higher if refiners' subsidies are cut. Refiners are compelled to sell the gas at US$315 (Bt10,663) a tonne, compared with the global price of $740. They are shouldering the difference of Bt1.36 per kilo.

The Internal Trade Department is keeping a close eye on product prices.

"We can't freeze the gas price as it's not within our authority. What we can do is ask whether the increase at this time of high fuel prices is suitable. But if the price has to be increased, the study showed a slight rise in costs. Manufacturers cannot use this as an excuse to raise their product prices," Yanyong said.

The department will send officers to inspect cooking gas filling shops nationwide, to prevent traders from hoarding to profit from the increase. Selling gas above prescribed prices would subject the vendors to five years in jail and/or a fine of Bt100,000.

The cooking gas price increase would take effect by the end of next month, to help reduce the Oil Fund's financial burden. Amid pressure from high fuel prices, the Oil Fund is being forced to reduce mandatory contributions from oil retailers to help delay further pump price hikes.

"Without a change, motorists will be encouraged to switch to this gas. If the situation remains this way, Thailand will need to import it," Energy Minister Piyasvasti Amranand said.

Chavalit Pichailai, deputy director-general of the Energy Policy and Planning Office, said that if the Oil Fund levies are cut again, it would be limited to diesel, which enjoys huge consumption and is widely used in transportation and industry.

However, he believes that global oil prices have reached their peak and soon domestic retail prices - which are at historical highs - could be slashed.

Petchanet Pratruangkrai

The Nation