Experts want oil price to stay high despite decline in global crude prices

Speakers at the seminar also suggested that the government keep retail oil price at a high level even though crude oil prices have declined. This policy would create a safeguard for the next round of oil crisis in the next 34 years.

The Chinese economy is widely pro¬jected to drive the global economy next year, but they are worried whether it would grow 8.5 per cent as expected next year.

Ampon Kittiampon, secretarygeneral of the National Economic and Social Development Board, said the government must pursue microleague fiscal policy next year to ensure that its budget could really reach the people.

However, the government should maintain fiscal discipline and ensure that its investment projects could generate income, other¬wise it would lead to increase in public debts," he said.

Supavud Saicheua, managing director of Phatra Securities, said the government policy would be efficient if its spending next year and in the first half of 2010 con¬tributed to farmers, the whitecollar group and small and mediumsized enterprises that were directly affected by the current crisis.

"Setting a clear target will create comfort and confidence increas¬ingly," he said.

Supavud projected that the economy would take eight quarters to recover from this crisis, compared with four quarters in a general crisis.

Phatra Securities estimated that the Kingdom's economic growth would be 3.3 per cent next year, lower than the 4.5 per cent projected by the International Monetary Fund.

Ampon said the economic growth target next year was not an issue but how to prevent bankruptcy in the business sector was more important. He was optimistic that the agricultural sector would continue to generate income.

Major industries - such as petro¬chemicals and the car sectors - would not be shut down, but they would only reduce inventory in keeping with diminishing demand.

He warned the private sector not to make next year's business plan based on this year's economic growth, which had been driven by exports. The exports were expected to slow down next year as the effectiveness of fiscal policy could not be projected.

"Whether the government could push up investment, build up confidence and keep farm price stability will have to be seen. If 8090 per cent of the budget goes to the people, we will survive as consumption will pick up," said Ampon.

Piyasvasti Amranand, chief adviser of Kasikornbank, said the government should keep the retail oil price high to collect tax in order to discourage oil consumption and encourage alternative energy.

E10 and E20 consumption should be promoted continuously, which could increase by 50 per cent without creating any impact.

Meanwhile, oil fell for a second day in New York as Japan entered its first recession since 2001 and China's largest crude producer said demand has declined "sharply".

China National Petroleum Corp, the biggest producer in the world's secondlargest oil con¬sumer, said demand had fallen since September because of the global credit crisis. Opec may wait until December to cut output, the group's president said.

Crude oil for December delivery dropped as much as $1.44, or 2.5 per cent, to $55.60 a barrel in afterhours electronic trading on the New York Mercantile Exchange. It was at $56.32 at 9.17am in London.

Prices remained lower yesterday even after Royal Dutch Shell and Chevron Corp announced pipeline disruptions in Nigeria. Shell extinguished a fire at a pipeline that carries crude to the Forcados export terminal. Chevron shut its onshore production in the country after a pipeline breach last week.

Crude slumped 2.1 per cent to settle at $57.04 on Friday, having touched $54.67 the previous day, the lowest since January 30, 2007. Prices declined 6.6 per cent last week as world equity markets dropped, Germany entered its worst recession in 12 years and US retail sales fell for a fourth straight month.