Caretaker Deputy Prime Minister Chidchai Vanasatidya will preside over a meeting of concerned agencies today to finalise measures aimed at easing the impact of rising oil prices.

Among those attending will be representatives of the Energy, Finance and Transport ministries.

"The impacts are huge, particularly on the cost of living," said government spokesman Surapong Suebwonglee. "Right now, different parties have different proposals, including a proposed reduction in the excise tax on petrol sales."

Earlier, caretaker Finance Minister Thanong Bidaya said tax cuts would not be adopted lest market mechanisms be distorted. But oil pundit Piyasvasti Amrananda urged a cut in contributions to the Oil Fund.

Some fear that tax-cut measures to ease the effects of skyrocketing oil prices will rock financial discipline at a time when the country's economic growth may fall short of its targets.

It is estimated that for every litre of octane-95 petrol that is sold for Bt28.74, Bt8.45 is collected for excise tax, municipal tax, value-added tax and the contribution to the Oil Fund to pay off government-initiated petrol subsidies from the past.

Escalating global oil prices have translated into higher petrol prices at gas stations and a new round of price hikes takes effect today.

Truck operators have raised freight rates by 15 per cent to 20 per cent while pressuring the government to ensure adequate supplies of diesel. Bus operators will meet tomorrow to ask the government to approve a recommendation by the Transport Ministry to increase bus fares to 9 satang per kilometre.

Energy Minister Viset Choopiban met with oil refineries and oil traders yesterday to discuss options to help operators in the transport sector. One notion they discussed was to provide diesel to bus operators at cheaper-than-market prices.

Transport Minister Pongsak Ruktapongpisal said PTT, Shell, Esso (Thailand), Caltex (Thailand) and Bangchak had agreed to join the programme if it is approved. Oil-filling coupons will be issued to Bangkok and provincial bus operators that register for the scheme in the next 10 days.

"This will help reduce the impact of oil prices and prevent bus operators from raising fares," he said.

Deputy Transport Minister General Chaiyanan Charoensiri said the offer to sell cheap diesel to bus operators was not yet finalised.

Banyong Amphorntrakul, who represents Bangkok bus operators, said that cheaper diesel was not the correct remedial measure.

"The government should rather let fares move according to the market mechanism," he said, adding that bus operators will soon ask for the Transport Ministry's permission to raise bus fares by another Bt1 to Bt9.

The government has reportedly asked refineries to reduce their refining fees by US$2 to $3 (Bt75.23 to Bt112.84) per barrel, a source in the refining industry said.

Bangchak Petroleum Plc's senior executive vice president Manoon Siriwan, who attended the meeting, said that if refining fees are to be lowered, it should be only a temporary measure. Refineries have just begun recording positive results in the past three years after suffering huge losses between 1997 and 2002.

Yesterday, crude oil futures rose on worries over Iran's nuclear ambitions, with the country's top nuclear negotiator warning that it may halt all cooperation with the UN nuclear watchdog.

By midday in Europe, light sweet crude for June delivery gained 42 cents to $73.75 a barrel in electronic trading on the New York Mercantile Exchange. Crude for June delivery on London's ICE Futures rose 80 cents to $73.80 a barrel.

The situation led energy authorities to call yesterday for a meeting to discuss measures to ensure adequate supplies if deliveries from the Middle East are disrupted.

Thailand's oil reserves are now sufficient for 40 days, according to the Energy Policy and Planning Office.

Domestically, all oil traders except PTT Plc will raise their retail prices today by 40 satang per litre. Octane-95 gasoline will hit a new record high of Bt28.74 per litre.

PTT Plc's senior executive vice president, Chaiwat Choorit, said the company was shouldering a loss of Bt1.50 for every litre of gasoline it sells.

Bangchak's Manoon said that if Thailand retail prices were to truly reflect the market, they should be raised by another Bt2 per litre.