Oil price-control proposal draws fire
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Oil price-control proposal draws fire

Energy executives say heavy-handed government moves could hurt business and the environment

An attendant fills the tank of a vehicle at a PTT service station in Samut Prakan. (Photo: Somchai Poomlard)
An attendant fills the tank of a vehicle at a PTT service station in Samut Prakan. (Photo: Somchai Poomlard)

Energy executives are challenging an attempt by the Ministry of Energy to amend the law to give it more power to control oil prices.

The decision could lead to a long-term oil shortage in Thailand, while reduced prices could encourage increased consumption of fossil fuels, harming the environment, executives say.

If the ministry is allowed to interfere with oil pricing, it will interrupt oil trading in the free market, said Yodphot Wongrukmit, a former senior executive vice-president of the energy conglomerate Bangchak Corporation Plc.

“The state move to regulate oil prices is an outdated approach and does not fit current economic circumstances,” he said.

Echoing Mr Yodphot, a former senior official at the ministry said oil prices kept at low levels by state price controls could deter retailers from selling fuel because of concerns about potential losses.

A disruption in the domestic oil supply could occur, eventually leading to an oil shortage, said the former official.

The officials were responding to a recent interview in which Energy Minister Pirapan Salirathavibhaga said the ministry was working on amending a law enabling the authorities to better regulate oil prices.

The goal was to reduce energy expenses for households and businesses, especially in the logistics sector, he said.

Like its peers in many other countries, the Pheu Thai government uses large sums of tax money to subsidise fuel prices because it is politically popular. Maintaining price caps on diesel and cooking gas has left the Oil Fuel Fund with a debt of 110 billion baht.

Mr Pirapan did not elaborate on how the government would control oil prices further, saying he plans to forward a draft of the amended law to Prime Minister Srettha Thavisin before seeking approval from parliament.

Mr Pirapan previously told a TV programme that he would “transform” the oil price structure to better regulate the prices of diesel, gasoline and gasohol.

He said he believes the government and oil traders should jointly deal with oil price fluctuations so that consumers can buy fuel at more stable prices.

The government fully controlled retail prices of oil before ending the policy in 1991 to promote trade and competition in the market, as well as inject money from new investments into the economy.

Before 1991, there were 6,000 petrol stations in the country. After oil prices were determined by the market, the number soared to 12,000 in 1997 and reached 20,000 last year.

Mr Yodphot warned the government that maintaining low oil prices for too long can affect efforts to promote energy conservation.

If people become accustomed to buying inexpensive fossil fuels, how will authorities instil the habit of using fuel efficiently in people’s minds, he asked.

The wise use of energy is an essential part of campaigns aimed at reducing dependence on fossil fuels and cutting carbon dioxide emissions, said Mr Yodphot.

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