Cost of diesel to be cut this week amid falling global oil prices
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Cost of diesel to be cut this week amid falling global oil prices

A pickup refuels at a PTT station in Bangkok. (File photo)
A pickup refuels at a PTT station in Bangkok. (File photo)

The domestic diesel price is to be cut to 33 baht a litre this Friday, down from 33.5 baht a litre, as global oil prices keep falling, says the Oil Fuel Fund Office (Offo).

It will be the fourth in a series of price reductions since early February when the retail price in Thailand stood at 34.94 baht a litre.

Diesel under Platts reference prices sharply decreased from US$133 a barrel on average in January to $103 a barrel in February.

The price continued to fall to $91.8 a barrel last month, becoming a main factor behind the 0.5-baht-a-litre reduction of the domestic diesel price, said Wisak Watanasap, director of the Offo.

Another factor keeping the domestic diesel price at low levels is the waiver of the diesel excise tax of five baht a litre.

The waiver was scheduled to end on May 20, but the cabinet extended the period until July 20.

Previously the government struggled to cap diesel prices at 34.94 baht a litre, following the impact of the Russia-Ukraine war which drove up global energy prices.

A diesel price subsidy programme was employed, with money from the Oil Fuel Fund spent to relieve the financial burden of motorists and manufacturers.

The fund was consequently 130 billion baht in the red in January.

The situation led authorities to request a 30-billion-baht loan to support the fund, which was quickly used as Offo paid 20 billion baht a month to subsidise diesel prices, or around 14 baht a litre, during the global oil price surge.

With less pressure from global energy prices, authorities would no longer subsidise diesel prices through the fund, but would settle debts accumulated during the surge in global oil prices.

The fund's losses recently decreased to 91.8 billion baht, down from 108.6 billion baht in early March.

Of that, 45 billion baht is debt incurred by the diesel price subsidy programme, while the remaining 46.8 billion baht resulted from subsidising domestic liquefied petroleum gas (LPG).

Offo is subsidising the liquefied petroleum gas price by maintaining it at 423 baht per 15-kilogramme cylinder until the end of June.

The LPG market price stands at 453 baht per cylinder.

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