Halt To Oil Levy Approved: Thailand

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OIL

Halt to oil levy approved

By Watcharapong Thongrung

The Nation

Big cuts in petrol, diesel prices today; gasohol unaffected

The National Energy Policy Committee yesterday resolved to suspend the Oil Fund levy on diesel as well as octane-95 and octane-91 petrol, effective today.

The Oil Fund now collects Bt7.50 per litre from octane-95 petrol. This will also affect the excise tax, which is calculated on the overall price.

The octane-95 petrol price will immediately come down by Bt8.02 per litre: Bt7.50 as the contribution to the Oil Fund and Bt0.52 as excise tax. The price of octane-91 will drop by Bt7.17, and that of diesel by Bt3 per litre. After the cuts, octane-95 petrol will retail at Bt39.32 a litre, down from Bt47.34, while octane-91 will drop to Bt34.77 from Bt41.94. Diesel will cost Bt26.99, down from Bt29.99.

Prime Minister Yingluck Shinawatra, chairing the committee's meeting for the first time yesterday, said that the approval of the government policy to reduce the price of petrol and diesel by lowering the levies on these fuels to the Oil Fund has been granted. The matter has now been handed to the Energy Policy and Planning Office (EPPO) for further implementation.

In addition, the meeting approved a study to be undertaken to determine what impact the levy reductions will have on gasohol, and whether the Oil Fund will be used to subsidise alternative energy prices. The outline of the intended study has been forwarded to the EPPO for further consideration.

The Energy Policy Administration Committee, chaired by Energy Minister Pichai Naripthaphan, also met yesterday after the meeting of the National Energy Policy Committee.

Pichai said after the meeting that the committee agreed to reduce the price of octane-95 petrol, octane-91 petrol and diesel starting at 6 am today. The resulting price reduction of these fuels across the country will follow the approval of the National Energy Policy Committee.

"The policy will wipe out Bt1.6 billion in monthly contributions to the fund," Pichai said, adding that the compensation would run up to about Bt3 billion.

Last night, a ministry caravan kicked off an inventory check for the calculation of compensation to fuel station owners.

Retailers to be compensated

To shield oil traders from losses on fuel remaining in storage that will now be sold at the new lower prices, the commission has allocated Bt3 billion to compensate filling stations. In addition, the commission has approved Bt7 million for Energy Ministry officials and provincial energy departments to inspect the inventory of 17,000 filling stations across the country from midnight last night to 6am today.

With regard to the expected loss of Bt6.16 billion from levy deductions to the Oil Fund, it is worth noting that the fund has a current outstanding balance of Bt1.06 billion. The expected cash flow to the fund is Bt15 billion, which is sufficient to subsidise gasohol, NGV and LPG to January of next year. After that period, the Energy Fund Administration Institute (EFAI) will consider borrowing from financial institutions or issuing government bonds for an amount of Bt20 billion, which will be used to continue subsidies and will need to be approved by the EPPO.

Prasert Bunsumpun, CEO of PTT, expressed his concern over the suspension of the Oil Fund levy, stressing that the inventory inspection and compensation to oil traders before and after the price changes must be transparent and fair to all parties. PTT is also concerned whether the government is able to fund subsidies for price differences between petrol and gasohol, and whether these funds come from the Oil Fund or from reduction of excise taxes. If the government is committed to fund and maintain the price differences, then PTT will go ahead with its plans to invest in alternative energy.

Accordingly, Prasert believes that the measure will not affect the financial status of the Oil Fund because it's a short-term policy. But if there is not enough money, the government will have to borrow to make up any shortfalls.

He further stated that these price reductions will not affect the consumption of LPG and NGV, because the price of these fuels is still lower. However, if the government has to cap the price of NGV at Bt8.50 per kg, then the government may have to find ways to support this low price.

Seree Denworalak, president of the Thai Tapioca Traders Association, said that the government should have measures to keep the gap between the price of benzene and gasohol at Bt6 per litre in order to ensure a stable price for cassava.

"The government previously announced that it would have some measure to shoulder the cost of gasohol and keep the retail price lower than benzene. It should urgently consider reducing collection for excise tax to help promote the use of gasohol," he said.

Seree added that the government might also provide soft loans or subsidise the retail price of gasohol for a while.

The market price of cassava is currently quoted at Bt2.20-2.30 a kilogram. If the price remains stable, farmers will not suffer from the lower price of petrol, he noted.

-- The Nation 2011-08-27

[David006]

the commission has approved Bt7 million for Energy Ministry officials and provincial energy departments to inspect the inventory of 17,000 filling stations across the country from midnight last night to 6am today.

LOL ...can just see all the white uniformed "officials" running around closed gas stations with flash lights and dipsticks earning their 7m..

[londonthai]

very goods news, for a change.

this would, hopefully, lower down prices of goods, especially foods, spiralling up for the last 3 years.

a fast move from the government to boost the grow of the oil dependent economy. They still have to figure out, what alternative energy sources they are going to promote, to prevent thailand from future oil price hikes on the global markets

Edited August 27, 2011 by londonthai

[trevorw]

Someone correct me if I'm wrong, but I do not recall any government anywhere in the world reducing a tax on gasoline in the whole of human (gasoline) history.

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

[prakhonchai nick]

The price of gasohol has not been reduced.

Only 91 and 95 octane petrol is reduced. which will assist the motorbike maniacs, but be of little use to the majority of car users. 95 octane petrol is now very hard to find.

[Jirapa]

the commission has approved Bt7 million for Energy Ministry officials and provincial energy departments to inspect the inventory of 17,000 filling stations across the country from midnight last night to 6am today.

LOL ...can just see all the white uniformed "officials" running around closed gas stations with flash lights and dipsticks earning their 7m..

Don't be so cynical. We're get back to the good old days of Taksin when gasoline was cheap. I say "right on!"

[Jirapa]

The price of gasohol has not been reduced.

Only 91 and 95 octane petrol is reduced. which will assist the motorbike maniacs, but be of little use to the majority of car users. 95 octane petrol is now very hard to find.

If your car runs on Gasohol it will run on 91 or 95 Octane

[David006]

the commission has approved Bt7 million for Energy Ministry officials and provincial energy departments to inspect the inventory of 17,000 filling stations across the country from midnight last night to 6am today.

LOL ...can just see all the white uniformed "officials" running around closed gas stations with flash lights and dipsticks earning their 7m..

Don't be so cynical. We're get back to the good old days of Taksin when gasoline was cheap. I say "right on!"

don't be so safetious... :lol:

[monty]

Not much benefit for the average person. Pretty much everybody uses gasohol, apart from people with very old vehicles, or motorbike nuts who want the extra 0.1% performance regular petrol gives them.

Price cuts in diesel will have maybe a small effect on prices of consumer goods (although businesses here are not in the habit of passing savings onto customers!), but at the moment I think maybe 50% of the big trucks run on NGV, so impact will not be big.

Sales of gasohol will take a massive drop as there will be not much or no price difference with regular petrol, which I assure you the cassava growers will not appreciate.

I don't see the point really, apart of course for Pua Thai needing to fulfill their election promises!

[Heng]

If they ever completely get rid of 91 (Benzene/gasoline), the first thing I'm going to do is replace all of our current benzene engines with diesel ones.

F! this gasahol fascism.

[rheinwiese]

Someone correct me if I'm wrong, but I do not recall any government anywhere in the world reducing a tax on gasoline in the whole of human (gasoline) history.

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

Spot on. You spoke my mind.

[LJW]

the commission has approved Bt7 million for Energy Ministry officials and provincial energy departments to inspect the inventory of 17,000 filling stations across the country from midnight last night to 6am today.

LOL ...can just see all the white uniformed "officials" running around closed gas stations with flash lights and dipsticks earning their 7m..

Don't be so cynical. We're get back to the good old days of Taksin when gasoline was cheap. I say "right on!"

I remember it being 10 baht per liter, but that was before Taksin.

[haroldc]

Well, it's nice to know that all the people driving Ferraris, Porsches, etc. will enjoy paying less for their octane-95 and octane-91 petrol while the rest of us enjoy the resulting higher pollution levels.

But seriously, what is the rationale for encouraging the use of 100% petroleum-derived petrol and diesel fuels? Most automobiles made in the past 3-5 years can run on E20, and outside of Bangkok it's still difficult to find a filling station that has it.

[Jirapa]

Someone correct me if I'm wrong, but I do not recall any government anywhere in the world reducing a tax on gasoline in the whole of human (gasoline) history.

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

Spot on. You spoke my mind.

Don't know about you but where I live the roads aren't clogged and I've driven many a time from south to north and the only place with congestion on the way is around BKK. Thai roads are pretty empty compared to the rest of the world.

[Jirapa]

the commission has approved Bt7 million for Energy Ministry officials and provincial energy departments to inspect the inventory of 17,000 filling stations across the country from midnight last night to 6am today.

LOL ...can just see all the white uniformed "officials" running around closed gas stations with flash lights and dipsticks earning their 7m..

Don't be so cynical. We're get back to the good old days of Taksin when gasoline was cheap. I say "right on!"

I remember it being 10 baht per liter, but that was before Taksin.

Yes but it wasn't $108 dollars a barrel then

[bubba]

I guess this isn't good news for PTT, since they only sell gasohol products.

Guess it's also not good for the ethanol industry in Thailand, all the way from the cassava farmers through the ethanol producers. Overnight, nobody will be buying gasohol. Contrary to what Monty posted above regarding an "extra 0.1% performance" from regular petrol, gasohol actually contains about 5% less energy than regular petrol since ethanol contains less energy than petrol. The result is that you will get at least 5% less mileage from gasohol compared to petrol. All cars that can use gasohol can run on regular petrol, so why would anyone buy gasohol now?

And what about the massive loss of revenue to the Government, which was apparently used to subsidise LPG which is used by nearly every Thai family for cooking - even the ones who are not consuming petrol or diesel?

[gregb]

Stupid, stupid, stupid.

The idea behind the original policy was to increase the percentage of liquid fuels produced domestically within Thailand. This is absolutely critical given the extreme volatility and shortages in the global oil market. It is going to be even more critical in the future.

Meanwhile, the PT seems insistent on killing the fledgling industry within Thailand, so that when it really becomes absolutely essential, it won't be here at all.

Morons.

[PaulHamon]

Someone correct me if I'm wrong, but I do not recall any government anywhere in the world reducing a tax on gasoline in the whole of human (gasoline) history.

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

Spot on. You spoke my mind.

Spot on. You spoke my mind, also!

[EvilDrSomkid]

But Gasahol 95 is 90% benzine, how can that price not also go down?

Is it still at 37.04 today?

[jackr]

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

So it's you making all that traffic stop and putting more pollution in the air so that you may traipse about the city.

To be fair, I hardly think this will encourage those who don't have/can't afford wheels to go out and buy some, or indeed drive more; it'll simply leave more money in people's pockets. On the pollution front, if you want to help, try and convince Thais to lobby government to clean up tuk-tuks and songthaews. Certainly in the case of CM, it is these junk vehicles that are coughing out the majority of pollution in the city, not your average Vios/scooter driving joe!

[Jirapa]

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

So it's you making all that traffic stop and putting more pollution in the air so that you may traipse about the city.

To be fair, I hardly think this will encourage those who don't have/can't afford wheels to go out and buy some, or indeed drive more; it'll simply leave more money in people's pockets. On the pollution front, if you want to help, try and convince Thais to lobby government to clean up tuk-tuks and songthaews. Certainly in the case of CM, it is these junk vehicles that are coughing out the majority of pollution in the city, not your average Vios/scooter driving joe!

Precisely!

[gregb]

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

So it's you making all that traffic stop and putting more pollution in the air so that you may traipse about the city.

To be fair, I hardly think this will encourage those who don't have/can't afford wheels to go out and buy some, or indeed drive more; it'll simply leave more money in people's pockets. On the pollution front, if you want to help, try and convince Thais to lobby government to clean up tuk-tuks and songthaews. Certainly in the case of CM, it is these junk vehicles that are coughing out the majority of pollution in the city, not your average Vios/scooter driving joe!

And what is your simplistic solution for the supply shortages that are going to become rampant in 5 years because they just drove the companies providing up to 10% of Thailand's liquid fuels out of business?

[Pib]

Fuel products have always been considered a tax tit for governments; good to see at least one government weaning themselves and allowing the money to stay in the peoples' pockets.

[OzMick]

Not much benefit for the average person. Pretty much everybody uses gasohol, apart from people with very old vehicles, or motorbike nuts who want the extra 0.1% performance regular petrol gives them.

Price cuts in diesel will have maybe a small effect on prices of consumer goods (although businesses here are not in the habit of passing savings onto customers!), but at the moment I think maybe 50% of the big trucks run on NGV, so impact will not be big.

Sales of gasohol will take a massive drop as there will be not much or no price difference with regular petrol, which I assure you the cassava growers will not appreciate.

I don't see the point really, apart of course for Pua Thai needing to fulfill their election promises!

All new fuel-injected Honda motorcycles have a sticker mandating the use of 91 petrol. Extra performance is barely noticeable, but why void your warranty for a few baht /week?

Local bike shop owner tells me she has 2-3 carby model bikes in every day for carburettor clean, all running Gasohol 95. Gasohol 95 will absorb moisture from the air and it accumulates in the carby fuel bowl, and it affects bikes more when only partial filled - more air = more moisture.

I'm no greeny, but the use of renewable energy sources has to make some sort of sense, and the renewable fuels have to be cheaper to encourage use and compensate for lost performance and extra consumption. This is a tax break for the wealthy to be funded by public debt, and makes as much sense as the rest of this government's policies.

[happysanook]

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

So it's you making all that traffic stop and putting more pollution in the air so that you may traipse about the city.

To be fair, I hardly think this will encourage those who don't have/can't afford wheels to go out and buy some, or indeed drive more; it'll simply leave more money in people's pockets. On the pollution front, if you want to help, try and convince Thais to lobby government to clean up tuk-tuks and songthaews. Certainly in the case of CM, it is these junk vehicles that are coughing out the majority of pollution in the city, not your average Vios/scooter driving joe!

Precisely!

I agree...

One thing that's silly though is they're "compensating" the people with reserves. These people gain HUGE when the price goes up, but when they go down they don't lose? Ugh.

[muratremix]

it seems they want to bankrupt Thailand so they can buy it a bargain price!

[softgeorge]

I guess this will have a flow on effect. We will see prices dropping in the markets and other retail outlets.

I shouldn't try and be funny.

[spidermike007]

Someone correct me if I'm wrong, but I do not recall any government anywhere in the world reducing a tax on gasoline in the whole of human (gasoline) history.

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

Are you serious? Or was that comment a joke? The reduction in fuel prices will stimulate the economy and benefit all Thais. Do you use a bicycle? Do you recycle all of your waste? Do you use the same plastic bags for years, and forbid all of the stores that you shop in to give you plastic containers of any sort? If not, just keep quiet, and enjoy the benefit to the country. You have some very bad perspective on things. At this time of celebration, you are raining on the parade. Get a life please.

[KhunBJ]

...Yes I also remember the good old days where a liter was around 12 THB ... years back....

Concerning the oil levy fund and for that matter any other consumer taxes then it depends very much on ideology whether tax cuts are seen as positive or negative for the society as such ... personally I believe strongly that is better for the society to remove taxes on f.ex in this case diesel, gasoline and gasohol as well ... stop keeping prices of LPG & NGV artificially low, as well as removing any price caps that the Government agencies put on f.ex cooking oil and generally stop interfering in price setting ... let the free market work out the price of the product, competition will ensure a fair price which in the long run will be for the benefit for the consumer.

Consumer taxes are more relevant for products which use induce a direct on indirect cost on the State , f.ex. alcohol, tobacco, sugar etc , so crank up the taxes here.

[Jirapa]

This is insane at a time when all Thai towns and cities have polluted air from clogged roadways. Any responsible government should be increasing taxes to reduce dependence on vehicles, whether two- or four-wheeled. (Or three with some tuk-tuks.) With extra taxes you can begin the much-needed modernisation of the rail system.

Reduced use of vehicles might also lead to better health. Btw, how often do you see a Thai person walking in the city. I am in Chiang Mai, and the only people I see walking are farangs like myself (breathing in the diesel fumes as I wait for traffic lights to change....)

So it's you making all that traffic stop and putting more pollution in the air so that you may traipse about the city.

To be fair, I hardly think this will encourage those who don't have/can't afford wheels to go out and buy some, or indeed drive more; it'll simply leave more money in people's pockets. On the pollution front, if you want to help, try and convince Thais to lobby government to clean up tuk-tuks and songthaews. Certainly in the case of CM, it is these junk vehicles that are coughing out the majority of pollution in the city, not your average Vios/scooter driving joe!

Precisely!

I agree...

One thing that's silly though is they're "compensating" the people with reserves. These people gain HUGE when the price goes up, but when they go down they don't lose? Ugh.

It's not worth thinking about that. The good thing is the consumer is getting a better deal for a change so I applaud it. When everyone in the UK was going nuts about a litre being 1 pound 29 pence I was laughing at them as they earn so much more than people here who are paying not that much less.