EDITORIAL
Energy Minister Poonpirom Liptapanlop's backtracking on the July 1 timetable to increase the price of liquefied petroleum gas (LPG) and to eventually allow the price to float is typical of the practice common among politicians: to keep postponing an unpopular decision which may hurt their political base.
Her explanation is that the foremost priority is to ensure adequate LPG supply to meet ever-increasing demand.
The energy minister had a point when she suggested the supply problem needed to be addressed first. The cooking gas which, in recent years, has become a popular alternative fuel for vehicles, particularly taxis and passenger cars, suddenly disappeared from most filling stations over the weekend, ahead of Ms Poonpirom's earlier announced July 1 schedule for the gas price to go up.
At bona fide filling stations which continued to do business as usual, long queues of cars formed to get their tanks filled, causing traffic congestion in the vicinity. The minister attributed the abrupt gas shortage to logistics problems at PTT's Khao Bo Ya terminal in Chon Buri, while proprietors of filling stations denied the allegation that they were hoarding the gas for profit.
By now, the LPG shortage problem may already have been eased to the satisfaction of motorists. But the crucial problem has yet to be addressed by the energy minister - which is to do away with the subsidy that has kept the LPG price artificially low, at 18.13 baht per kilogramme against the actual market price of about 30 baht/kg.
This distortion will only encourage more motorists to switch from gasoline or gasohol to LPG, which is two times cheaper and whose price is more stable. The result will be more government subsidy or, in other words, more taxpayers' money to be used for the benefit of just a group of people.
Apart from the indefinite postponing of the timetable to let the LPG price float, Energy Minister Poonpirom appears to have made another blunder by promising to freeze LPG prices for the city's taxis until the end of the year - not to mention her earlier decision to ensure cheaply-priced diesel for the public transport, agriculture and fisheries sectors for the rest of the year. All these price distortions do not encourage fuel users to be more aware of the need for energy conservation.
Fuel price subsidies may keep the taxi and bus fares as well as prices of agricultural products from rising too fast in light of the runaway oil prices, which are currently hovering above US$130 per barrel and may reach $200 by the yearend, as predicted by some analysts.
The reprieve will be temporary. One day the government will no longer be able to afford the subsidies and will be forced to scrap them altogether.
Rather than being forced by circumstances to allow the LPG price to go up substantially in just one swoop, which would have a shock impact on consumers, the Energy Ministry should allow the price to float gradually for an extended period, although this means subsidies may continue until such time as the domestic price reaches a realistic level that reflects the real market price. The price of compressed natural gas (CNG) for vehicles, too, should be allowed to float accordingly.
While allowing fuel prices to float, the government also needs to encourage energy saving among the public and to pour more investment into the development and production of alternative energy sources.
But prior to that, it needs a comprehensive long-term energy policy and not just a stop-gap one.
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