Oil Fund Levy Cut Will Mean Long Term Pain: Thai Opinion

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EDITORIAL

Oil Fund levy cut will mean long term pain

By The Nation

Govt claims policy is temporary but history says otherwise

The decision of the Yingluck government to hurriedly reduce the Oil Fund levy on octane-91 and octane-95 petrol as well as diesel may serve its short term political purpose. But the decision will have negative impact and some of its consequences could be long term because it is related to consumers' behaviour of petrol consumption.

The government said that the policy was temporary, but the history has shown that the populism policy is addictive. The government would find it hard to stop the populism policies even though the government may claim that these policies were temporary. The free electricity and tap water service was the case in point.

Although the reduction of Oil Fund's contributions may be able to lower the cost of living immediately, the measure is short term and unproductive. Eventually, the consumers would feel the negative impact from distorting petrol prices.

First of all, the reduction of Oil Fund levy runs against the concept of the drivers paying for petrol subsidy because the contribution from the Oil Fund was meant to stabilise the domestic retail oil prices such as liquefied petroleum gas (LPG) and natural gas for vehicles (NGV). With an absence of the Oil Fund's contribution, the government is likely to use the taxpayers' money, in whatever form, to subsidise the future petrol price rises. If this is the case, every taxpayer will have to subsidise the fuel prices even though they don't drive.

Secondly, the reduction would discourage the users from being energy efficient. The consumers would naturally adjust their consumption according to the level of the prices. The government should have let the petrol prices move in accordance to the market mechanism to encourage them to save energy. After all, Thai consumers should learn to adjust their consumption to cope with the fluctuation of oil prices which depends on external factor which Thais absolutely have no control of.

Thirdly, the reduction of Oil Fund levy would sabotage the past governments' effort to campaign for alternative energy. It took time and effort to change the users' attitude towards gasohol, which is made partly from homegrown energy corps produces. When the bio-fuel was first introduced, the users felt reluctant to shift to gasohol because of their suspicions over gasohol's quality. For instance, executives of major car companies had to appear on a TV ad to assure the drivers of the quality of gasohol. There was also a well known light-hearted commercial that gasohol was blamed for everything that could have gone wrong.

Unfortunate move

Now that many drivers have shifted from traditional petrol to gasohol, it is unfortunate that the Yingluck government decides to eliminate the price competitiveness of this homemade bio-fuel, which would subsequently encourage the users to go back to traditional gasoline again.

If gasohol becomes less popular, the farmers of tapioca and sugar cane would feel the pain after the ethanol market is flooded by these energy corps. Over the past years, farmers of these crops could fetch good prices from their produces without relying on the government's subsidy because of the demand for ethanol naturally pushed up their produce's prices. Many farmers have shifted to grow these energy crops because of recent rising demand of alternative fuel to offset the imported petrol. The reduction of levy on gasoline is likely to depress the prices of sugar cane and tapioca. And the sudden shift of the government energy policy would make many of these farmers unprepared.

The government's decision to reduce the Oil Fund levy also sent a confusing signal to the operators. Some gas station operators have reduced the sale of gasoline to promote the environmentally gasohol only to find that the government's policy has changed again.

Prime Minister Yingluck Shinawatra has obviously no other choice but to honour her promise to the voters that she would scrap the oil fund during the election campaign. But her government should have come up with better-calculated energy policy to ensure the supply of petrol in a sustainable manner.

Thailand is the net importer of petrol and thus Thais should learn to live with it. The government should communicate with the voters to enable them to realise the necessity for efficient consumption instead of trying to encourage them to waste the resources. What the government is doing is wrong and countering to the desirable trend.

-- The Nation 2011-08-29

[KRS1]

Conserve gas and fart in a jar.

[Udox]

Would somebody please explain the difference with all these different fuels?

I have no idea what is the difference with gasoline and gasohol, 91 and 95, B5 Diesel and standard diesel etc....

I usually use the same filling station and know its 91 in the motorbike and B5 Diesel in the pickup - but when at a different gas station it would be nice to understand what the differences are.

Back home it was easy: Leaded or unleaded or diesel.

[CMSteve]

i'm in no way an expert, but from my understanding:

91 and 95 are octane numbers, much like regular and premium in the states.

benzine, means its real petrol/gasoline, gasohol means its is a mix with gasoline and alcohol (assuming that gasoline is cheaper than alcohol, this makes the final product cheaper)

b5 diesel is 5% biofuel. its another mix. 95% petroleum diesel and 5% diesel made from recycled cooking oils and such.

Would somebody please explain the difference with all these different fuels?

I have no idea what is the difference with gasoline and gasohol, 91 and 95, B5 Diesel and standard diesel etc....

I usually use the same filling station and know its 91 in the motorbike and B5 Diesel in the pickup - but when at a different gas station it would be nice to understand what the differences are.

Back home it was easy: Leaded or unleaded or diesel.

[cardholder]

The reduction in 91 should see an increase in boy-racers tear-arsing around the towns and villages and their motorcy's

[cheeryble]

I would like someone to explain this to not only this governemnt but the US government.

Punitive taxation is the only way to reduce fuel consumption and the popularity of these obscenely large vehicles that are "normal" in America, and rapidly becoming "normal" here.

There is no reason why 90% of the vehicles on the street shouldn't be 1000cc or less.

America in particular is the cause of not only it's own problem but is costing the world dearly.

Just like traffic will ease up with just a few less cars and get bad with just a few more, and just as in any restricted market, oil prices will drop drastically with just a little less demand.

America has it in it's own power to reduce demand drastically with a stroke of the taxation pen (and it can be compensated so neutral). It would not only save enormous money it would bring the happy prospect of not being in obeisance or conflict with the very countries it often detests or which are in any case detestable.....Saudi, Libya, Iran, Iraq, Venezuela.....because instead of being cock of the roost they'd be competing cap in hand.

Here's the thing.

I personally couldn't give too much of a dam_n if Americans are too inactivated and can't do something about their lobbyist problem to deal with their own scenario. But their large consumption habits......no, it's greed.....have hugely impacted oil prices for those in the developing world for whom it means a very great deal more.

Imagine, just a few short years ago it was $20 a barrel.

So here in Thailand couldn't we just realise that a Fortuner or huge pickup doesn't make our genitals any bigger. They're hell to park and never have anything in the back.

What's the point?

Cheeryble

Edited August 29, 2011 by cheeryble

[hammered]

Whatever the longer term effects, it is a pretty popular decision right now.

One of the problems democracies face is that policies that have sensible long term positives often mean short term pain and those who want to implement them risk electoral rejection. Punitive taxes on bad things is an example of this.

[whybother]

Whatever the longer term effects, it is a pretty popular decision right now.

One of the problems democracies face is that policies that have sensible long term positives often mean short term pain and those who want to implement them risk electoral rejection. Punitive taxes on bad things is an example of this.

They might have a bit of trouble with the doubling of the bottled gas prices, though.

[DickDastardly]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products. I can't imagine anyone would buy gasohol E10 now as it's the same price as petrol but contains less energy.

[hammered]

Whatever the longer term effects, it is a pretty popular decision right now.

One of the problems democracies face is that policies that have sensible long term positives often mean short term pain and those who want to implement them risk electoral rejection. Punitive taxes on bad things is an example of this.

They might have a bit of trouble with the doubling of the bottled gas prices, though.

Have they doubled yet? Cant say I have bought a bottle recently and I havent read or heard of it yet.

[tragickingdom]

It is clear who is paying the politicians. It is the oil industry, it is outright absurd to cut the price of Fossil Fuels. It will lead to a economy that will be weaker than those of any other country not cutting prices. We will keep on seeing pre historic trucks on the road for years to go. Where the Chinese and the Europeans will develop clean future energy and learn how to use fuel efficiently the Thai economy will keep on wasting its resources, that is till the moment that the money has been depleted, the shock will be enormous. The fact that Gasohol is not treated the same way will let us believe that Dubai does not like alternative fuels very much.

[hanuman1]

Whatever the longer term effects, it is a pretty popular decision right now.

One of the problems democracies face is that policies that have sensible long term positives often mean short term pain and those who want to implement them risk electoral rejection. Punitive taxes on bad things is an example of this.

They might have a bit of trouble with the doubling of the bottled gas prices, though.

The government says this is a temporary measure, according to the article.

[whybother]

Whatever the longer term effects, it is a pretty popular decision right now.

One of the problems democracies face is that policies that have sensible long term positives often mean short term pain and those who want to implement them risk electoral rejection. Punitive taxes on bad things is an example of this.

They might have a bit of trouble with the doubling of the bottled gas prices, though.

Have they doubled yet? Cant say I have bought a bottle recently and I havent read or heard of it yet.

From another thread: (with thanks to Crossy for pointing it out.

The suspension of the contribution to the Oil Fund, he added, will affect the subsidy for LPG, which Attawit said was used by every household for cooking. Even though the diesel price has dropped by Bt3, the price of LPG will rise from Bt280 to Bt570 per 15 kg cylinder, he said.

(my bold)

http://www.thaivisa....the-red-shirts/

@hanuman1: Which part is temporary?

[hanuman1]

They might have a bit of trouble with the doubling of the bottled gas prices, though.

Have they doubled yet? Cant say I have bought a bottle recently and I havent read or heard of it yet.

From another thread: (with thanks to Crossy for pointing it out.

The suspension of the contribution to the Oil Fund, he added, will affect the subsidy for LPG, which Attawit said was used by every household for cooking. Even though the diesel price has dropped by Bt3, the price of LPG will rise from Bt280 to Bt570 per 15 kg cylinder, he said.

(my bold)

http://www.thaivisa....the-red-shirts/

@hanuman1: Which part is temporary?

The article says that the policy is a temporary measure.

Looking back to line 1 of the article, I infer from this that the policy is to "reduce the Oil Fund levy on octane-91 and octane-95 petrol as well as diesel".

Let me know if I've missed something.

[mortenaa]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products. I can't imagine anyone would buy gasohol E10 now as it's the same price as petrol but contains less energy.

Its nothing but madness to use farmland to produce fuel instead of food. The effect of this madness is raised food prices. Besides E20 and so on is also less efficient, and bad for your engine, so you are back to scratch one.

[Mosha]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products. I can't imagine anyone would buy gasohol E10 now as it's the same price as petrol but contains less energy.

Its nothing but madness to use farmland to produce fuel instead of food. The effect of this madness is raised food prices. Besides E20 and so on is also less efficient, and bad for your engine, so you are back to scratch one.

Watch out for a programme on Discovery "When the food runs out". They said that the world is one failed harvest away from global starvation. One reason is growing bio-diesel.

[lannarebirth]

It is clear who is paying the politicians. It is the oil industry, it is outright absurd to cut the price of Fossil Fuels. It will lead to a economy that will be weaker than those of any other country not cutting prices. We will keep on seeing pre historic trucks on the road for years to go. Where the Chinese and the Europeans will develop clean future energy and learn how to use fuel efficiently the Thai economy will keep on wasting its resources, that is till the moment that the money has been depleted, the shock will be enormous. The fact that Gasohol is not treated the same way will let us believe that Dubai does not like alternative fuels very much.

It feels good to be on the same side as you on at least one subject. Many people here don't understand this policy but if you know who privatized PTT and who owns those shares it all becomes a lot clearer.

[alexakap]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products.

Wrong.

More "home grown bio fuel" fields - less fields for "home grown food".

Reduce the price for bio-fuel -> raise the price for all food-supply chains.

Without the bio-fuel - you may live. Without the food - you will not. Pick your choice.

[Chris Lawrence]

Biofuel is very expensive to produce; look at the share price of many biofuel companies? Not much action in the share prices. More work needs to be done with LPG and diesel to improve kpg. Biodiesel does not work in many new diesel engines as the injectors cant handle the fat.

The long term pain is more about seeing an editorial not qualifying or objective in the differences and cost of fuel types. :jap:

[mortenaa]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products. I can't imagine anyone would buy gasohol E10 now as it's the same price as petrol but contains less energy.

Its nothing but madness to use farmland to produce fuel instead of food. The effect of this madness is raised food prices. Besides E20 and so on is also less efficient, and bad for your engine, so you are back to scratch one.

Watch out for a programme on Discovery "When the food runs out". They said that the world is one failed harvest away from global starvation. One reason is growing bio-diesel.

Thanks, I will.

[Tanaka]

Has any of you noticed that B5 diesel has disappeared from the stations? It is because the B5 costs more to produce and more to buy for the stations but they are forced to keep a specific price. So they make more from the ordinary diesel.

[mdechgan]

Has any of you noticed that B5 diesel has disappeared from the stations? It is because the B5 costs more to produce and more to buy for the stations but they are forced to keep a specific price. So they make more from the ordinary diesel.

Yeah that's because the market price for palm oil is actually higher than the price of diesel per liter.

Something like 40 baht per liter of palm oil vs. 30 baht per liter diesel.

The higher market price of palm oil was also due to the market shortage at the beginning of this year.

The shortage was a result of the B5 idea where tons of palm oil was shipped to the refineries to make the biodiesel.

Lots of politicians, especially the ones from the south of Thailand where palm is grown and harvested made lots of money due to the government policies.

[furyrider]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products. I can't imagine anyone would buy gasohol E10 now as it's the same price as petrol but contains less energy.

Its nothing but madness to use farmland to produce fuel instead of food. The effect of this madness is raised food prices. Besides E20 and so on is also less efficient, and bad for your engine, so you are back to scratch one.

Watch out for a programme on Discovery "When the food runs out". They said that the world is one failed harvest away from global starvation. One reason is growing bio-diesel.

Thanks, I will.

Ok Now how do we blame this on America To make cheerypie happy.

[anterian]

I will choose walking and eating over driving and starving.

[arthurwait]

Has any of you noticed that B5 diesel has disappeared from the stations? It is because the B5 costs more to produce and more to buy for the stations but they are forced to keep a specific price. So they make more from the ordinary diesel.

It was cheaper to buy for stations and actually a slightly better profit margin per litre. Although lots of people still didn't trust it so sells in lower quantities and therefore lower total profit than diesel.

It's disappeared due to diseased trees I was told.

Edited August 29, 2011 by arthurwait

[whybother]

The pain is here already.

10:14am

PTT and Bangchak will cut all gasohol prices by 60 satang per litre, effective Tuesday: INN /via@tukky_nt

4:50pm

PTT, Bangchak raise gasoline prices by Bt0.60, effective Tuesday; Caltex increases all oil product prices today /MCOT

[janverbeem]

How daft. Surely they need to reduce the price of E10, B5 and especially E20 to encourage greener motoring and the use of home grown bio fuel. They have reduced the price of all the wrong products. I can't imagine anyone would buy gasohol E10 now as it's the same price as petrol but contains less energy.

They didn't reduce anything,they only removed the levy from fuels.

[noahvail]

The pain is here already.

10:14am

PTT and Bangchak will cut all gasohol prices by 60 satang per litre, effective Tuesday: INN /via@tukky_nt

4:50pm

PTT, Bangchak raise gasoline prices by Bt0.60, effective Tuesday; Caltex increases all oil product prices today /MCOT

Didn't take them very long, did it?

I wonder who we'll here from defending the increases.

[lannarebirth]

The pain is here already.

10:14am

PTT and Bangchak will cut all gasohol prices by 60 satang per litre, effective Tuesday: INN /via@tukky_nt

4:50pm

PTT, Bangchak raise gasoline prices by Bt0.60, effective Tuesday; Caltex increases all oil product prices today /MCOT

Slowly those prices are going to sneak right back up to where they were, as the public got used to those prices already. But now, instead of the profits being split with the govt. against the day when oil prices climb, it will go straight to the oil companies. Remember who privatized PTT? Remember who got the shares?

[Kwasaki]

Would somebody please explain the difference with all these different fuels?

I have no idea what is the difference with gasoline and gasohol, 91 and 95, B5 Diesel and standard diesel etc....

I usually use the same filling station and know its 91 in the motorbike and B5 Diesel in the pickup - but when at a different gas station it would be nice to understand what the differences are.

Back home it was easy: Leaded or unleaded or diesel.

Basically the rule of thumb is to use the fuel in you car or bike for which it is designed to accept, this is usually found in the handbook or on many cars there is a sticker on the inside of the fuel filler cap.

Gasoline 91 and 95 is petrol as you must know the 91 and 95 is a octane rating in RON for both types of fuels.

Gasohol 91 and 95 i.e.( E10 ) is a fuel mixture of 10% anhydrous ethanol and 90% gasoline and Ron rate is the same.

There's also gasohol E20 which can be used on most new petrol cars these days.

It is recommended that in motorbikes you should not use gasohol unless the motorbikes handbook obviously said it can be used.

Some motorbikes are supposed to be Shell Gasohol 95 compatible but its reliability unknown, maybe some fuel injection models maybe but certainly not carburettor models.

B5 Bio-diesel has different solvent properties than petro-diesel, it will degrade natural rubber gaskets, hoses in vehicles mostly manufactured before 1992. Although these components tend to wear out naturally and most likely will have already been replaced with FKM, which is nonreactive to bio-diesel.

Also note that bio-diesel has been known to break down deposits of residue in the fuel lines where petro-diesel has been used.

Personally I would never use or have used it in any diesel vehicle of mine.

That my take and understanding on it, hope it helps you.

Edited August 29, 2011 by Kwasaki