Oil Fund to determine on diesel cap

Oil Fund to decide on diesel cap

No quick result from earlier excise cut

The board of the Oil Fuel Fund is expected to decide on Monday if it will continue to cap the retail diesel price at 32 baht per litre for another week or raise it by one or two baht to relieve the burden on the fund, a source in the Energy Ministry said.

The soaring energy price triggered by the Ukraine-Russia conflict and the weak baht have pushed up costs despite the cabinet’s latest diesel excise tax cut which will last until July 20 to mitigate the impact of the global oil price surge. The meeting will be chaired by Energy Minister Supattanapong Punmeechaow.

Starting this month, the government decided to lift the 30-baht-per-litre diesel price cap and would only subsidise half of the difference above the 30-baht mark. The board of the Oil Fuel Fund approved a proposal to raise the diesel price cap from 30 baht per litre to 32 baht effective on May 1.

“The government needs to promote an understanding that the five-baht tax cut will not bring the price down immediately because the Oil Fuel Fund is in the red. It is likely the retail diesel price will be raised by one baht in the coming week. The public needs to know that the government spends about 20 billion baht monthly to subsidise the diesel price,” said the source.

As of May 22, the Oil Fuel Fund was 76.29 billion baht in the red. By the end of this month, the Oil Fuel Fund could be 80 billion baht in the red and it is worrying if the amount reaches 100 billion baht, the source said.

Government spokesman Thanakorn Wangboonkongchana said the government has placed a heavy emphasis on tackling high energy prices and is prepared to roll out further measures to reduce the impacts and stimulate economic recovery.

He said soaring energy prices were due to several factors such as growing global demand as part of the post-Covid economic recovery and the Ukraine-Russia conflict.

Crude oil prices have fluctuated sharply, jumping from US$70 per barrel in December last year to US$140 per barrel in March and to US$114 per barrel on May 26.

Mr Thanakorn said the Energy Ministry rolled out a raft of measures to mitigate impacts from October last year including capping diesel prices at 30 baht per litre from October to April 30 this year.

He said the country’s diesel prices were no higher than those in the neighbouring countries and considered to be in the medium-to-low range.