Diesel Price Increase

[Sel]

If anyone is interested

Diesel fuel will rise by 60 satang at midnight today.

Expected to rise by 4 baht in total (probably 60 satang to 1 baht increments) as the govt subsidy is withdrawn.

Not sure when it will finally be at it's +4 baht but I suspect soonish with increases every week.

[p_brownstone]

If anyone is interested

Diesel fuel will rise by 60 satang at midnight today.

Expected to rise by 4 baht in total (probably 60 satang to 1 baht increments) as the govt subsidy is withdrawn.

Not sure when it will finally be at it's +4 baht but I suspect soonish with increases every week.

It was a foregone conclusion - within related Industries anyway - that Diesel prices would shoot up soon after the Election here.

No Government could continue to subsidise a litre of Diesel by the amount allowed in Thailand, the Fuel Subsidy Fund is in the (negative) Billions of Baht already (and some way, some day, that has to be repaid).

The subsidy was pretty pointless too; the Governments' stated rationale was that since most Consumer Goods - including food of course - are transported within Thailand by (Diesel powered) trucks, any increase in the cost of that particular fuel would immediately translate into higher prices. (OK - it's all politics, hence the delay in reducing the subsidy). However a visit to a Thai Freshmarket just after a Gasoline (not Diesel) price rise would provide clear evidence that prices there were immediately higher - the reason given ............ that the the cost of Gasoline had increased ........... and it would be a total waste of time to point out that the produce arrived from upcountry in a Diesel vehicle!.

Still, I guess the Asavahaemes et al are happy.

Patrick

[Ajarn]

"In spite of the Bt0.60 increase to the price of diesel, the government, through the Oil Fund, is still subsidising diesel by Bt3.77 per litre. Without the subsidy, the price of diesel would have been quoted at Bt18.36 a litre, according to the Energy Police and Planning Office."

[george]

Diesel price hike not affect Thai economy:MOF

BANGKOK: -- Finance Ministry Spokesman Somchai Sajjapongse said that the four-per cent rise of retail diesel price would not slow down the economic growth, and that the Fiscal Policy Office (FPO) is unlikely to modify the annual growth projection.

Energy Minister Prommin Lertsuridej announced today that the price of diesel fuel would increase by 0.60 baht per litre tomorrow, as part of the government’s plan to halt fuel subsidy instituted last year to cushion the soaring energy prices.

He said the government has paid 67 billion baht into its oil subsidy fund, mostly for diesel costs.

Thailand floated its petrol prices in October 2003 after a nine-month subsidy, but Prime Minister Thaksin Shinawatra ordered continued diesel subsidies to protect the economy.

The Finance Ministry spokesman said the FPO's projection that the Thai economy would grow 6.1 percent this year had already factored in an increase in diesel price for the entire 2005.

However, the FPO will announce official figures relating to the economic projection for 2005 on Friday.

Thai investors did not share the Finance Ministry’s claim, as they sold their stocks in panic, plunging the Stock Exchange of Thailand (SET) index down nearly 12 points to close at the all-time low 725.89 at the end of the trading day today.

Analysts said the market was panicing that the diesel price hike was materialized earlier than expected.

However, analysts were optimistic that the market would recover on Tuesday.

They pointed out that it was worth watching trading by foreign investors who had been accumulating shares since last November.

Troubles in Thailand’s southern border region might also pressure them to sell shares.

Meanwhile, bankers are worried that the diesel fuel price rise will fuel inflation.

Thongchai Charoensith, an executive at Thailand’s second largest commercial bank, KASIKORNBANK (KBANK), said this first move in the gradual end of subsidy would surely impact bank customers who would face higher production costs, particularly for transport.

He believed the government would gradually increase diesel price over the next few months towards eventual float around mid-year when diesel fuel price would reflect the actual market rate.

As production cost rises with the diesel price, inflation is set to rise along with prices of goods, he said.

--TNA 2005-02-21

[sriracha john]

Diesel is around 24 baht a liter in the USA (assuming all my conversions of dollar/baht and gallon/liter are correct.... $2.33 a gallon for anyone wishing to double check).

Obviously there are a plethora of inter-connected factors involved in world oil prices, but if that becomes the ultimate price that diesel settles down at in Thailand...or something in that neighborhood, I would envision some serious repercussions in the Thai economy.

[Dragonman]

Diesel prices dropped by 0.50baht in my area last week.So new price rise practically offset at present.

Is it possible that some retailers will offset some increases by subsidising from large profits obtained from sales in attached convenience stores?

[Ajarn]

  Is it possible that some retailers will offset some increases by subsidising from large profits obtained from sales in attached convenience stores?

<{POST_SNAPBACK}>

You mean to give away his profits to his customers in the form of a discounted diesel price?

No,I don't think thinks that's possible... (pigs still can't fly, right?)

[p_brownstone]

  Is it possible that some retailers will offset some increases by subsidising from large profits obtained from sales in attached convenience stores?

You mean to give away his profits to his customers in the form of a discounted diesel price?

No,I don't think thinks that's possible... (pigs still can't fly, right?)

The main reason that the C Stores, Fast Food outlets, Car Washes etc., have proliferated on forecourts in the last few years is because of the Thai Governments’ price controls on the Retail price of Fuel. Retail Margins are so low that Station Owners / Operators had to find other sources of revenue.

VERY little of the 60 Stang increase in the price of Diesel ends up in the pocket of the Owner / Operator.

Patrick

[Thaiboxer]

Brilliant politics here...subsidize the price of diesel fuel in order to win votes, then turn around after the election and shaft those who put you in office. GWB...I hope you're taking notes!

[sriracha john]

Brilliant politics here...subsidize the price of diesel fuel in order to win votes, then turn around after the election and shaft those who put you in office. GWB...I hope you're taking notes!

<{POST_SNAPBACK}>

no need. he wrote the book, albeit with a lot of spelling errors...

[astral]

I was amazed that they let the price go DOWN a few weeks back.

Perhaps that was electioneering as well!!!!!

[Sel]

Petrols also going up 40 satang at midnight tonight

[Bizz]

Im paying 40-50 tbart

Stop Moaning

Edited February 22, 2005 by Bizz

[george]

Diesel price rise ‘will not affect exports’

BANGKOK: -- Today’s Bt0.60 a litre rise in the price of diesel will not have an adverse impact on the export sector, according to Industry Minister Pongsak Ruktapongpisal.

While admitting that the rise would affect transportation costs, he said that businesses had already made thorough preparations in anticipation of higher fuel charges, with exporters setting prices which accommodated the risk of diesel price rises.

Other industries had already worked to boost efficiency and reduce other expenditure to compensate for the other fuel costs, for example by cutting staffing levels and salaries, he noted.

Nonetheless, he admitted that further measures would have to be put in place if the price of diesel rose any higher.

--TNA 2005-02-22

[george]

Govt appeals to traders to keep down price of goods

BANGKOK: -- The Department of Internal Trade is preparing to send a petition to around 400 companies, urging them not to use today’s rise in the price of diesel to edge up the prices of their goods.

The move comes amid fears that the Bt0.60 rise in the price of diesel could see retailers immediately raise the prices of consumer goods, which would push up the rate of inflation and make consumers reluctant to spend.

“The Department of Internal Trade will submit a letter requesting cooperation from 400 companies, including those producing food and beverages, electronic goods and construction materials, and will ask them to keep goods at current prices for a certain period”, said Mrs. Orasa Munkongkuntivong, the department’s Deputy Director-General.

According to the department, the higher diesel price will have only a 0.44 percent impact on the prices of industrial goods, and the impact will not be immediate, as companies would first have to use up existing stocks.

Nonetheless, Mrs. Orasa conceded that companies producing agricultural goods would feel an immediate pinch due to the need for the daily transport of agricultural products.

But she stressed that the impact would be relatively minimal, pushing up transportation costs by only 1 percent for each journey.

The department will undertake an urgent exercise to determine whether or not an immediate rise in the prices of agricultural goods will be necessary.

The department is also closely monitoring the prices of cement, rolled steel and zinc.

“If companies need to raise the prices of their goods at the present time, they will have to present evidence to the department in order that we can determine whether or not they have sufficient reason to do so”, Mrs. Orasa said, warning that companies making unreasonable price rises could face prison sentences of up to seven years and fines of up to Bt140,000.

The department hopes to prevent companies taking advantage of the higher diesel price through a series of inspections of shops around the country.

--TNA 2005-02-22

[george]

Update:

Diesel price hike affects inflation, concedes Finance Minister

BANGKOK: -- Finance Minister Somkid Jatusripitak today conceded the Energy Ministry’s move to raise the capped diesel prices by 0.60 baht per liter had affected inflation rates and fueled product costs.

However, he said the Commerce Ministry had closely monitored product prices in the market to prevent producers and distributors from hiking them unreasonably.

For a reason on the diesel price rise, he said, the Energy Ministry had clearly stated the decision was needed to ease the State Oil Fund’s burdens on hefty subsidy.

Dr. Somkid voiced confidence the diesel price hike would not have any effect on the interest rate policy and the foreign capital inflow since the confidence in the overall picture of the country’s economy remained strong.

He said the plunge in the Stock Exchange of Thailand (SET) index upon the diesel price adjustment stemmed from a psychological effect, which should last in the short run.

Despite the panic-selling on that day, foreign investors were still a net buyer in the market.

The minister said he wanted investors to consider the overall picture of the market in the long term.

He believed the investors could enjoy high returns from the long-term investment in SET since performance results of most listed companies still outpaced those in neighboring countries.

--TNA 2005-02-24

[george]

Increased diesel price affects provincial industries

NAKHON RATCHASIMA: -- A recent increase in the price of diesel will weaken the provincial industries' competitiveness on the international market, according to the Nakhon Ratchasima's Chamber of Commerce.

The diesel price rise will push up the operating costs of all manufacturers in the country's northeastern province of Nakhon Ratchasima, the chairman of the provincial chamber of commerce, Taveesant Sonanurak, told TNA on Wednesday.

Last year, the province received nearly 40 billion baht in investment -- the highest ever -- approved by the Board of Investment of Thailand (BOI).

The increased costs of production might make businessmen think twice about investing in the province’s industrial park, Mr. Taveesant warned.

If the fuel price continues to rise, local manufacturers will lose their comparative competitiveness in relation to rival countries, including China and Vietnam, where the costs of production are much lower.

Other businesses will also be severely affected, he said.

The manager of the big shopping chain, the Mall, Preecha Lim-aue told TNA that the prices of consumer goods had not risen yet because the stocks on the shelves were made before the diesel price increase earlier this week.

But prices of goods may now rise because of the increased diesel prices and transport costs, he warned.

The increased diesel price will affect the Thai economy in the long run, he said.

--TNA 2005-02-24