A gift? Pump prices still way too high

A gift? Pump prices still way too high

The latest "New Year’s gift to the people" from Prime Minister Prayut Chan-o-cha is the oil price cuts that were decided by the National Energy Policy Council on Monday and came into effect on Tuesday morning.

The cuts brought the pump price of gasohol 95 and gasohol 91 down to 30.30 baht/litre and 28.28 baht/litre respectively – down two baht/litre from Monday’s price. The price of diesel is down one baht to 26.89 baht/litre.

The energy council decided to retain contributions to the Oil Fund for all types of oil products but, nevertheless, reduce the amount by one baht a litre for petrol and gasohol and 30 satang a litre for E85 and diesel.

The latest cuts of 1-2 baht/litre for diesel and gasohol are substantial compared to previous small adjustments, which saw pump prices being lowered by just 30-60 satang/litre at a time. But do the new prices accurately reflect current global oil prices? No, I don’t think so. 

Prime Minister Prayut explained that pump prices could not be reduced further to truly reflect the global market trend because of price fluctuations. He did, however, promise that when crude oil prices become more stable, there will be a new round of retail price reductions.

How nice. But just when will the National Energy Policy Council feel that global crude oil prices are stable enough to justify another round of substantial price cuts? When prices drop below the US$55/barrel, US$ 50/barrel or US$ 45/barrel mark that Opec announced it is willing to endure before it starts cutting back on production to prop up the price?

Global oil prices peaked at US$115/barrel in June and have nosedived over the past four months and now hover around US$60/barrel. West Texas intermediate crude was quoted on NYMEX at US$57.76/barrel today, Brent Spot US$62.56 and Dubai oil US$61.32.

Given these figures, it is clear crude oil has dropped by more than US$50 since June this year and is still sliding - a curve analysts predict will continue until next year.

Prime Minister Prayut said that domestic retail oil prices for gasohol have steadily dropped since the military takeover in May, to a combined total of about 10 baht already, including the latest cuts. Compared to the US$50/barrel price slump since June, the accumulated 10 baht reduction does not reflect the actual market trend.

So the rationale that domestic retail pump prices cannot be further cut to reflect realistic oil prices, because the government needs to continue the contributions to Oil Fund in case oil prices rebound, or because of concern that Thai motorists will waste more oil if it is cheaper, is neither logical nor convincing.

Why is it then that every time crude oil prices go up, oil refiners here are allowed to hike their prices accordingly, several times a month, and they do not have to wait for prices to stabilise -- as we, the consumers, are told to wait? It is simply ridiculous and beyond comprehension.

The latest oil price cuts should not be termed a New Year’s gift from the government or the National Energy Policy Council. Consumers are entitled to the cuts, without having to beg, if they are treated at all fairly by the council and the oil refiners.

The longer consumers are made to wait for another round of substantial price cuts, the bigger the windfall profits for the oil companies -- and the bonuses for their executives and staff.

Veera Prateepchaikul

Former Editor

Former Bangkok Post Editor, political commentator and a regular columnist at Post Publishing.

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