Cheap oil fuels woe over consumption

Cheap oil fuels woe over consumption

A PTT petrol pump attendant on Phetkasem Road refuels a car. The government is mulling a tax rise on fuel to help fund its campaign for alternative fuels.Pattarachai Preechapanich
A PTT petrol pump attendant on Phetkasem Road refuels a car. The government is mulling a tax rise on fuel to help fund its campaign for alternative fuels.Pattarachai Preechapanich

Thailand's energy policymakers have expressed concern that the low oil price is encouraging motorists to be careless with energy consumption.

The government is looking at raising the tax on fuel to increase its fund for campaigning for alternative fuels, said Areepong Bhoocha-oom, the Energy Ministry's permanent-secretary.

A tax rise is yet to be finalised but next week the energy and finance ministries will discuss the possibility of raising the levy on fuel and gases in the transport sector.

The excise tax on diesel was already increased by 70 satang per litre from Jan 1 this year to 4.95 baht, which is projected to increase national revenue by 15 billion baht a year.

The new tax is likely to include liquefied petroleum gas and compressed natural gas to be fair to motorists because large trucks that use gas do not pay tax.

"The deep plunge in the crude oil price to below US$30 per barrel may make motorists happy and cut some imported product prices, but it is ruining our efforts to promote energy efficiency," said Mr Areepong.

Retail petrol and diesel prices have declined by over half from mid-2014, while demand for petrol gained 13.2% based on average daily use of 26.4 million litres per day at the end of 2015, up from 23.3 million litres the previous year.

Diesel use increased 3.7% to 60 million litres and jet fuel use gained 9.5% to 16.6 million litres year-on-year.

Demand for jet fuel and petrol rose to record highs in Thailand, partly because of the increasing number of travellers. However, airfares are cheaper in part thanks to the lower oil price as fuel is the major cost of the aviation industry.

Oil prices this year are likely to stay low because of the weak global economy, said Mr Areepong.

"The ministry has worked hard for decades convincing people of the importance of saving energy, so please don't spend wildly because of low-priced fuel," he said.  

The cheap oil price is also a concern for the alternative fuel business as it frets whether the government will continue its subsidies for green fuel. Sirivuth Siampakdee, president of the Thai Ethanol Producer Association (Tepa), said the production cost of biofuel is 77% higher than for fossil fuels.

He said ethanol demand had stayed at 3.6 million litres since the oil price plunge, ending years of continual increases.

"Tepa does not want to see demand slip for alternative fuel after years of effort. We just require a little sign from energy policymakers of their support, but they need to be decisive, such as phasing out pure petrol or supporting E20 and E85," said Mr Sirivuth.

Capacity utilisation for ethanol production plants averages 60% from full capacity of 5.4 million litres. This year three new plants are slated to bring capacity over 6 million litres. 

He also called on the government to support biofuel exports to Asean.

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