Oil at 200 a barrel not so unlikely says Thai minister
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Thailand is looking fearfully at the not-so-unlikely prospect of crude oil prices hitting US$200 a barrel, which could result in motorists paying 56 baht a litre for premium petrol.
Speaking at the Thailand Energy Showcase 2008 seminar, Energy Minister Poonpirom Liptapanlop said the $200 mark was possible based on statements by the president of the Organisation of Petroleum Exporting Countries (Opec), Chakib Khelil, who attributed the weak dollar to the US recession.
According to Opec, every 1% in the dollar's value will result in the crude price rising by $4 a barrel.
Lt-Gen Poonpirom advised the industrial sector to prepare for the possibility by adopting energy saving measures and switching to renewable energy.
A source at PTT Plc said premium petrol would reach 56.5 baht a litre at the pump if the crude oil price trading in New York hits $200, based on an exchange rate of 32 baht to the dollar.
Diesel prices could reach 53 baht.
Premium petrol currently sells for 37.09 baht and diesel 33.94 baht.
The minister said proposals to cut the tax on diesel had gone nowhere as they needed approval from the Finance Ministry, because of the impact it would have on government revenue.
The ministries are still discussing details of the likely effects.
'Considering the likely consequences, no decision is likely soon,' she said.
Instead of relying on tax cuts to pull down domestic fuel prices and relieve the burden on consumers, the ministry will promote the use of alternative energy sources to deal with energy costs over the long run.
The Energy Ministry favours a tax exemption for petrol stations which also sell compressed natural gas _ which is sold as natural gas for vehicles (NGV) by the monopoly distributor, PTT.
Petrol stations will receive tax incentives when they install NGV distribution outlets, she said.
'We will also look at measures to save household energy consumption.'
The ministry had allocated 10 billion baht for 'clean-loans' for households under its energy-saving programme.
The ministry was negotiating with electrical appliance makers for a 5% to 10% discount on energy saving items for households who join the programme, she said.
Rising oil prices are also hitting private and state-run bus operators, who held talks with Land Transport Department staff yesterday about a fare hike.
While agreeing that bus operators should increase their fares to reflect rising costs, acting director-general of the Land Transport Department Chairat Sa-nguansue said the agency would study the actual costs of passenger bus operators, and report its findings to the Central Land Transport Committee on May 15.
The committee would make the final decision.
Fuel should account for 30-40% of operating costs, but at present it made up half.
City bus operators want to raise fares from 8.50 to 10 baht for ordinary buses and by two baht to 14-26 baht for air-conditioned buses.
Inter-provincial bus operators want an increase ranging from three to nine satang per kilometre.
Deputy Transport Minister Songsak Thongsri argued that the nine-satang increment was too much.