FTI calls for rejig of oil price structure as fuel costs soar
The Federation of Thai Industries (FTI) has called on the government to redesign the domestic oil price structure to better deal with the impact of soaring global oil prices.
It did not elaborate what changes energy officials should make to create a new price structure but urged the policymaker to carefully weigh its budget constraints against the cost of living.
The government must make sure it can manage to relieve its burden and reduce the people's burden at the same time, said Kriengkrai Thiennukul, vice-chairman of the FTI.
The right solution is required as there are fears the global oil price will continue to soar after its rapid rise toward US$130 a barrel earlier this week, following reports that the US is considering imposing sanctions on oil exports from Russia.
Russia is one of the world's leading oil exporters, supplying 4-5 million barrels of oil a day, or around 5-6% of global supply, according to analysts at Thai Oil Plc.
"If the global oil price increases by $1 per barrel, the domestic retail oil price will go up by 0.25 baht a litre," said Mr Kriengkrai.
The government is controlling domestic diesel prices by using subsidies from the Oil Fuel Fund and cutting diesel excise tax by half for three months to cap its prices at below 30 baht a litre. Motorists are usually charged diesel excise tax at 5.99 baht a litre.
Thammasat University economist Praipol Koomsap earlier suggested the government offer another temporary excise tax cut of three baht on benzine. The excise tax on gasoline and gasohol, a mix of ethanol and benzine, currently stands at 5.2-5.87 baht a litre.
Mr Kriengkrai said the Oil Fuel Fund cannot subsidise retail oil prices for a long period.
With the escalating Russia-Ukraine conflict, it is possible the diesel price will rise beyond 30 baht a litre while benzine may reach 50 baht a litre.
"People must save energy more seriously by taking public transport and car-pooling," said Mr Kriengkrai.