Tue, August 09, 2022


Diesel price may hit THB38/litre as Oil Fund drying up

The price of diesel may hit 38 baht per litre now that the Oil Fuel Fund’s deficit is getting wider, an official said Tuesday.

Pornchai Jirakulpaisal, chief of the agency’s policy and strategy arm, said on Tuesday that the 35-baht-per-litre price may only be maintained until the end of this month. He added that the Oil Fuel Fund’s executive committee may have no option but to increase the capped rate to 38 baht/litre.

He said global oil prices have to be monitored closely along with the fund’s liquidity and the government’s ability to borrow money to replenish the fund. All these factors, he said, would affect the new retail price of diesel.

The fund’s executive committee agreed on Monday to up the price of diesel from 34 baht to 35 baht per litre from Tuesday.

Wisak Watanasap, director of the Oil Fuel Fund Office, said the fund currently subsidises diesel by 9.96 baht per litre because the current global price is 45 baht per litre.

He added that global prices fluctuated heavily over the past week. Crude oil at the Singapore market stood at US$158.29 per barrel on June 2, rising to $170.61 on June 6 and then again to $172.77 on June 10.

Wisak said apart from heavily subsidising the price of diesel, the Oil Fuel Fund is earning very little from the sale of benzyne and gasohol. Earlier, the fund earned about 1.02 baht for every litre sold, but now it gets just 0.09 baht per litre.

As of Sunday, the Oil Fuel Fund was in deficit worth 91.09 billion baht, which can be divided into a 54.57 billion baht deficit in oil contributions and subsidy, and a 36.52 billion baht deficit from LPG subsidy, Wisak added.

Separately, Energy Ministry spokesman Sompop Pattana-ariyangkul said refineries in Thailand have not been enjoying high margins over the last decade.

He was apparently referring to a comment from Kla Party secretary-general Korn Chatikavanij, who said on Sunday that refineries were making 8.56 baht per litre and that the government should lower this margin to bring down retail prices.

Sompop said the ministry’s Energy Policy and Planning Office did not conceal the margins earned by refineries and had published the figures regularly over the past 10 years.

He said the average refining margin between January and May was 3.27 baht per litre, adding that the margin fluctuates according to demand. For instance, in 2021 and 2022, when the demand was low, the margin came in at between 0.7 and 0.89 baht per litre.

Sompop added that the refining margin over the past decade was on average 2.15 baht in 2012, 2.2 baht in 2013, 2.35 baht in 2014, 2.43 baht in 2015, 1.83 baht in 2016, 2.16 baht in 2017, 1.7 baht in 2018 and 1.2 baht in 2019.

Published : June 14, 2022