Policymakers are preparing to fully float the prices of liquefied petroleum gas (LPG) for the household and transport sectors after global propane Saudi Aramco's price fell to US$345 per tonne.
A Ministry of Energy source who asked to be unnamed said the Energy Policy Administration Committee are studying the possible effects on the market before deciding tomorrow to float the prices of LPG.
LPG prices have been partially capped since December 2014 through state oil fund subsidies. The subsidy currently stands at 1.6 baht per kilogramme.
The government lowered the subsidy in 2014, creating a more open market for importers.
In 2016, Energy Ministry let the LPG import market float freely, but retained lower subsidies for domestic market.
Conflicts on the Strait of Hormuz, and overly bullish expectations on North American shale oil and gas depressed propane prices during the first five months of the year. A $345 price tag indicates that its time to float freely, the source said.
Thailand's LPG market capped wholesale prices below $400 per tonne (under 20 baht per kg) for a few decades, and then partially floated to $425 or 22 baht per kg.
The capping price policy was implemented when global oil prices jumped to over $100 per barrel. LPG was reportedly smuggled and illegally exported into neighbouring countries. Energy experts estimate the combined value of smuggling was above 100 billion baht per year.