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Published on January 12, 2008

"We know that Opec [Organisation of Petroleum Exporting Countries] wants to keep oil prices at a high level. However, the recent drop in oil prices is good as that delays the lifting of the domestic diesel price to more than Bt30 per litre," he said yesterday.

The stronger baht also reduces the pressure on oil retailers, as imports are cheaper, he said. Without intervention, the baht could have strengthened to Bt31 from Bt34 per dollar now and this would further cut the oil price by Bt2 per litre.

Chaiwat Chooritti, senior executive vice president of PTT, said the country's largest fuel retailer would hold its oil prices steady this week, due to the fall in global prices. Diesel has eased by almost $2 per barrel due to the warmer weather in Europe. This gives some breathing room to local oil retailers, which had planned to consider making an adjustment today to the domestic diesel price.

Although the marketing margin for diesel is only Bt0.98 per litre, retailers could hold on for a while, he said.

"We will monitor the situation next week. If the diesel price keeps sliding, we're ready to slash retail prices, particularly for diesel," he said.

Diesel would break the Bt30 barrier if its price were raised by 40 satang, since it is now at Bt29.74. Given that diesel fuels 60 per cent of all vehicles and logistics networks, the increase would send a shock wave throughout the economy.

Starting next Tuesday, PTT will market B2 diesel nationwide and hopes to sell B5 soon depending on palm-oil supplies.

Meanwhile, the Energy Ministry has started raising funds for rail network construction by increasing the levy all retailers have to pay on the sale of petrol, gasohol, diesel and B5 diesel.

The order took effect yesterday.

The mandatory contributions from diesel will go up to Bt0.75 per litre from Bt0.07, gasohol to Bt0.25 from Bt0.063 and B5 diesel to Bt0.25 from Bt0.0665.

Viraphol Jirapraditkul, director-general of the Energy Policy and Planning Office, said the additional income would go to the Energy Conservation Fund, which has to forward Bt0.50 per litre to the Transport Ministry for rail expansion projects nationwide.

"This increase will not raise retail prices, as contributions to the Oil Fund have been slashed at the same rates," he said.

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