Energy Min vows to peg local LPG price despite global fluctuations

BANGKOK, 25 March 2015 (NNT) – The Ministry of Energy has promised to maintain the domestic price of liquefied petroleum gas (LPG) at 24.16 baht per kilogram for the time being while an adjustment to the natural gas for vehicle (NGV) price could be seen within this year.

In response to fears that the current volatility in LPG prices in the world market would cause the domestic price to surge, Energy Minister Narongchai Akrasanee gave an assurance that his ministry is determined to keep the price unchanged at 24.16 baht a kilo, at least for now. He explained that the LPG Fund will be used to sponsor the price retention policy and offset losses during heavy fluctuations.

As for NGV, the minister insisted that no price increase will be implemented any time soon. Although the ministry has set a goal to raise the retail NGV price to correspond with the production cost of 16 baht per kilogram, he viewed that the adjustment can be pushed off so as not to create any burden on consumers. Should a hike be executed, he said it would be considered late this year.

Speaking of the 21st round of bidding for petroleum concessions which has been adjourned, Mr Narongchai affirmed the ministry is intent on pushing it forward sooner or later, reasoning that the new concessions will lead to more exploration works and provide the country with ample natural gas supply.


-- NNT 2015-03-25

The Minister's efforts are appreciated with so much bad economic news for Thailand - some of it being the Junta's responsibility. Unfortunately, a hike will follow likely in the third quarter as energy prices are recovering as the Thai economy will continues to falter.

Ultimately, weaning Thais off energy subsidies will make for a stronger economy but if the government cannot narrow the income gaps in society, many Thais must cut back further on domestic consumption while being unable to pay off household debt. And that will continue to reinforce a weak economy.

Still can't see where the subsidy is.

DId any of these decision makers ever take even the most basic economics classes? Every time they mess with the free market price it creates distortions. If peg (read: fixed) price is higher than world price, Thais are getting screwed. If lower than world price, deficit will have to be made up by Thai taxpayers, screwed again. How is this much different than the defamed rice scheme? That subsidy was aimed at producers, this one aimed at consumers, but a baht is a baht and potential for huge deficits (if pegged too low) or surplus (which makes it something of a tax and raises day to day expenses above what ought to be, hindering growth). Surplus also encouragement to do a bit of "milking" for pet projects of "friends".

More populism, courtesy of the taxpayer.