Why won't Thailand lower it's gas prices when oil prices fall?

[gyrosman]

Many of you seem to not understand that Thailand doesn't have refineries for oil. Everything is imported and the cost of shipping, docking, loading, processes are very expensive etc.. Best Idea ride a push bike or walk to the 7-11 and morning market.

[daveAustin]

Try buying petrol / diesel in Australia or better still in the UK !!

Stop grumbling !!!

Stop grumbling = I like to bend over.

That line of logic doesn't work, sorry; wages in those places are like ten times more than here. I was in the UK recently where fuel was about 65-70 baht while I was paying almost 50 baht here. Is that such a massive difference where people there are earning hundreds of thousands of baht a month and paying 50,000 baht for a decent secondhand car? There is huge disparity in many things here and fuel is one of them.

[AYJAYDEE]

Try buying petrol / diesel in Australia or better still in the UK !!

Stop grumbling !!!

Stop grumbling = I like to bend over.

That line of logic doesn't work, sorry; wages in those places are like ten times more than here. I was in the UK recently where fuel was about 65-70 baht while I was paying almost 50 baht here. Is that such a massive difference where people there are earning hundreds of thousands of baht a month and paying 50,000 baht for a decent secondhand car? There is huge disparity in many things here and fuel is one of them.

oil companies are not gonna sell their product cheaper than the price they can get somewhere else. thailand's oil is 60% imported.

[gemguy]

Many of you seem to not understand that Thailand doesn't have refineries for oil. Everything is imported and the cost of shipping, docking, loading, processes are very expensive etc.. Best Idea ride a push bike or walk to the 7-11 and morning market.

You are incorrect.

Thailand does have refinery capacity while it also imports refined petroleum products from regional suppliers...mainly Singapore.

If the prices for the refined products imported into Thailand are notably lower than the prices of refined products supplied by Thai oil refiners you could see the refiners lowering their prices to compete with the lower priced imported refined products....but that usually takes several months of adjustment.

Here in Thailand it would not be a big surprise to learn the importers of refined petroleum products get hit with a new import tax so the refiners here in Thailand are protected and maintain very healthy margins on their refinery operations.

But normally (if ) the prices of imported refined petroleum products are significantly cheaper, then those cheaper prices would eventually begin to drive down the over all market prices.

The problem for the Thai oil refiners concerns the price they have to pay for the imported crude oil feedstock.

If their feedstock supply sources are not lowering their prices for the crude oil then the refiners find it difficult to compete with the imported lower priced refined petroleum products.

The government may help them in a variety of ways as the industry is of key importance to the well being of the nation.

Cheers

[CPH]

The money goes to subsidize the price of Diesel which costs approximately 90 billions per year.

[bermondburi]

still 4 baht a litre here in Saudi.

[chiang mai]

still 4 baht a litre here in Saudi.

Whereas the cost of water per litre is, when bought from a convenience store?

[arthurwait]

Prjces at the pumps never go down, thats why it costs 5000 baht per litre.

[h90]

I was of the understanding that Petrol / Gas at the stations was subsidised...

I do believe that natural gas is subsidized. But, at about 169 baht per gallon (0ver $5 per gallon), for the yellow premium gas, I can assure you that is not a subsidized price. There is plenty of profit with that kind of pricing. I am fairly sure that money is going into either a government slush fund, or improving the bottom line of PTT.

Well before PTT couldn't buy the oil free on the market and Thailands oil got exported.

PTT had to buy from a broker who is owned (or partially owned) by the Shinawattra family.....At least they explained that at PAD and demanded that these contracts are canceled + the own oil used inside Thailand.

Edit: I don't know if it is true or not, but they explained it that way.

Edited October 16, 2014 by h90

[Soutpeel]

Many of you seem to not understand that Thailand doesn't have refineries for oil. Everything is imported and the cost of shipping, docking, loading, processes are very expensive etc.. Best Idea ride a push bike or walk to the 7-11 and morning market.

You obviously don't understand that Thailand has multiple refineries for crude,

crude oil is imported and refined locally

Edited October 16, 2014 by Soutpeel

[Soutpeel]

still 4 baht a litre here in Saudi.

Yes and one suspects there is no excise tax imposed, the vast majority of end cost on 1 litre of fuel is excise tax, not the cost of production

[samsensam]

The fuel price at the pump is dependent on a few factors

1. Government excise tax

2. Labor cost

3. Lease cost for equipment, land etc

4. Subsidy schemes

5. Raw material cost

6. Fluctuating exchange rates

7. Refinery sale price and whether the fuel price contract is hedged.

Some of these price drivers are fixed, some are not, but it's logical that a 23% drop in oil doesn't mean a 23% drop in fuel at the bowser.

exactly what i was going to say. i can go back to the newspaper now.

[Soutpeel]

I was of the understanding that Petrol / Gas at the stations was subsidised...

I do believe that natural gas is subsidized. But, at about 169 baht per gallon (0ver $5 per gallon), for the yellow premium gas, I can assure you that is not a subsidized price. There is plenty of profit with that kind of pricing. I am fairly sure that money is going into either a government slush fund, or improving the bottom line of PTT.

Well before PTT couldn't buy the oil free on the market and Thailands oil got exported.

PTT had to buy from a broker who is owned (or partially owned) by the Shinawattra family.....At least they explained that at PAD and demanded that these contracts are canceled + the own oil used inside Thailand.

Edit: I don't know if it is true or not, but they explained it that way.

Thailand only produces around 90 odd thousand barrels a day, not even close to what is required on a daily basis is Thailand, Thailand is always going to be a net importer of crude

[bermondburi]

still 4 baht a litre here in Saudi.

Whereas the cost of water per litre is, when bought from a convenience store?

The old adage that oil is cheaper than water is only true in certain situations. I buy an exchangeable 19 litre bottle of water for 5 Riyal,(about 40) but if you buy a one litre bottle of water in a shop it will likely be about 1 Riyal or 8 Baht so about double the price of fuel. Anyway, I love filling up here.

[bermondburi]

still 4 baht a litre here in Saudi.

Yes and one suspects there is no excise tax imposed, the vast majority of end cost on 1 litre of fuel is excise tax, not the cost of production

Yep, no taxes here. It also applies to cars. A Thai made Toyota will be 30-40 percent cheaper here. How crazy is that! A friend of mine in Thailand wants to buy a new Fortuner for about 1.25m I think. I looked at the same car in the dealership here and it was just over 700,000.

[farang000999]

Thailand has large sales tax because the sales tax is largely the burden of the lower and middle classes.

Huge sales tax on a car but no property/land tax.

[Petchou]

Gaz still cheaper than most European countries. Where is the problem?

What's next thing to complain about?

[enuff said]

.

Many of you seem to not understand that Thailand doesn't have refineries for oil.

"at least I can't see one from my bar stool in Pattaya."

enuff said

~

[natway09]

I get a message at least once a week on my phone with PTT outlets changes (up or down).

The taxes on fuel here are pretty good if have a look at Oz, UK or NZ prices Diesel is certainly subsidized but does not look like for

much longer

[AYJAYDEE]

I was of the understanding that Petrol / Gas at the stations was subsidised...

I do believe that natural gas is subsidized. But, at about 169 baht per gallon (0ver $5 per gallon), for the yellow premium gas, I can assure you that is not a subsidized price. There is plenty of profit with that kind of pricing. I am fairly sure that money is going into either a government slush fund, or improving the bottom line of PTT.

Well before PTT couldn't buy the oil free on the market and Thailands oil got exported.

PTT had to buy from a broker who is owned (or partially owned) by the Shinawattra family.....At least they explained that at PAD and demanded that these contracts are canceled + the own oil used inside Thailand.

Edit: I don't know if it is true or not, but they explained it that way.

Thailand only produces around 90 odd thousand barrels a day, not even close to what is required on a daily basis is Thailand, Thailand is always going to be a net importer of crude

. In 2011, Thailand produced an estimated 393,000 barrels per day (bbl/d) of total oil liquids, of which 140,000 bbl/d was crude oil, 84,000 bbl/d was lease condensate, 154,000 bbl/d was natural gas liquids, and the remainder was refinery gains. Thailand consumed an estimated 1 million bbl/d of oil in 2011, leaving total net imports of 627,000 bbl/d, and making the country the second largest net oil importer in Southeast Asia.

[monkeycountry]

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Because it's the best country in Asia.

You must be joking, PTT and the government are raping the poor people. And now they want to raise the sales tax to 10%.

Is it PTTs profit margin of 3% you call rape? (most companies have a profit margin of around 20%) Or do you simply have no idea what you are talking about?

[gemguy]

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Because it's the best country in Asia.

You must be joking, PTT and the government are raping the poor people. And now they want to raise the sales tax to 10%.

Is it PTTs profit margin of 3% you call rape? (most companies have a profit margin of around 20%) Or do you simply have no idea what you are talking about?

Most refineries operate on 3 to 5 % profit margins while sometimes they have a good month or good 1/4 and make around 7%...and sometimes they can make as much as 10 % for a number of reason if the market conditions are very favorable.

It is the production end of the oil business that is the most profitable for any oil company that has production operations as part of their portfolio.

Exploration is lucrative but also risky as some major money can be spent resulting in no pay back if their exploration efforts do not result in well flow rates that are significant or low flow rates that will take a long time to pay off the investment.

That and a lot of wells are capped because the oil is too sour having too much sulphur content.

The refinery business is a very intensive business with a load of daunting logistics and operational procedures that have most oil companies staying clear of including refinery operations as part of their overall investments.

In the USA there has only been 1 new refinery built in the USA, built in North Dakota.....the first in nearly 35 years ...built to process the Bakken Field oil production that has been increased by 10 to 20 fold, in some areas, because of directional drilling technology.

Anyhow, the point being the refineries are key in relation to the price you pay for your refined petroleum products while it is not the refineries that are making large profit margins......rather the volumes they supply add up to profits being in the multi millions of dollars.....but it is hard won and well deserved ...that is if you have ever worked on a refinery construction project you begin to realize the refinery business is not for the faint hearted by way of everything entailed to construct it and make it work and keep it running and make it profitable.

Creating a refinery from concept to completion is a major undertaking and a major achievement while most people do not even begin to really understand all that is involved so that you can simply pull into a gas station and buy what you need........and then whine and complain about the prices while believing you are being raped by the companies that supply you their products.

Cheers

Edited October 17, 2014 by gemguy

[Issangeorge]

In the past 6 months crude oil has dropped about 40%, but diesel in Thailand has dropped less than 6%, I would suggest that perhaps, the consumer is getting ripped off.

[canopus1969]

In the past 6 months crude oil has dropped about 40%, but diesel in Thailand has dropped less than 6%, I would suggest that perhaps, the consumer is getting ripped off.

Not at all - diesel was getting heavily subsidised so now getting nearer the cost. In actual fact they should double the price of diesel to try and stop its use - Western countries are try to stop the use of diesel in cities due to the dirt.

[Issangeorge]

The same can be said for the other grades also, I just used diesel as an example, but considering E20 was around 35, it should be about 28 now, that's just a 20% drop.

[SheungWan]

The same can be said for the other grades also, I just used diesel as an example, but considering E20 was around 35, it should be about 28 now, that's just a 20% drop.

'Should' ? Maybe you should inform us how oil grades for delivery work in Thailand such that the international spot price for oil 'should' always prevail.

[KhunBENQ]

The same can be said for the other grades also, I just used diesel as an example, but considering E20 was around 35, it should be about 28 now, that's just a 20% drop.

'Should' ? Maybe you should inform us how oil grades for delivery work in Thailand such that the international spot price for oil 'should' always prevail.

Should be 28? Not quite, but about 30 from todays latest price reductions.

http://thainews.prd.go.th/centerweb/newsen/NewsDetail?NT01_NewsID=WNECO5712160010001

Except for our US and Saudi friends: compare those prices with your home country and judge yourself.

Benzene 95 now stands at 37.36 baht/liter, Gasohol 95 at 30.30 baht/liter. Gasohol 91 is now 28.28 baht/liter, E20 at 26.98 baht/liter, while E85 is now 22.48 baht/liter and Diesel now stands at 26.89 baht/liter.

[Soutpeel]

Many of you seem to not understand that Thailand doesn't have refineries for oil. Everything is imported and the cost of shipping, docking, loading, processes are very expensive etc.. Best Idea ride a push bike or walk to the 7-11 and morning market.

Bullshit, you don't understand, Ban Chak, allied refining in Rayong to name just 2 oil refineries in Thailand

[Soutpeel]

In the past 6 months crude oil has dropped about 40%, but diesel in Thailand has dropped less than 6%, I would suggest that perhaps, the consumer is getting ripped off.

Or perhaps they are replenishing the money in the oil fund for when the price goes up again, as if they don't the whingers on here will really have something to whine about when the prices are no longer subsidised

[Soutpeel]

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Because it's the best country in Asia.

You must be joking, PTT and the government are raping the poor people. And now they want to raise the sales tax to 10%.

Is it PTTs profit margin of 3% you call rape? (most companies have a profit margin of around 20%) Or do you simply have no idea what you are talking about?

Most of the comments on this thread show the intellect of a pork pie, no they don't know what they are talking about