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Published on November 9, 2007

Fuel retailers could get another break on their mandatory contribution to the Oil Fund on Monday if global oil prices stay sky high.

"If oil prices keep escalating, on November 12, the ministry will promptly announce another cut," Energy Minister Piyasvasti Amranand said yesterday.

He did not say by how much, but a ministry source said 40 satang per litre for all grades.

The first decrease of 40 satang was on last Monday for all products, except 95-octane petrol.

Fuel retailers now pay the Oil Fund Bt1.10 for every litre of diesel sold, 30 satang for biodiesel, Bt4 for 95-octane petrol, Bt3.30 for 91-octane petrol, 30 satang for gasohol 95 and 20 satang for gasohol 91.

The ministry would consider cutting the levy for all fuels though it wants to promote the use of B5 biodiesel and gasohol, Piyasvasti said.

Sharp spikes in global oil prices this week have forced PTT and other distributors to raise pump prices of all fuels by 50 satang today.

Chaiwat Chooritti, senior executive vice president of PTT, said in a statement that so far this year, PTT had racked up losses of more than Bt3 billion from retailing, at a rate of Bt55 million-Bt60 million a day, or Bt2.50 per litre, due to the delayed increase in local prices.

Today's hike will push premium petrol and diesel prices to historic highs of Bt31.69 and Bt28.64.

Yesterday, diesel in Singapore climbed to US$108.44 per barrel while petrol was selling for $101.65. Dubai crude oil jumped to $88.82. Dubai oil has soared 57 per cent since early this year from $56.63 a barrel, while retail fuel prices have been moved up by only 20 per cent.

Piyasvasti listed several factors for the current surge in oil prices, mainly on the supply side. Although a hurricane has passed the Gulf of Mexico, production has not yet returned to normal. A pipeline in Yemen has exploded and tension is rising in the Middle East. The weak dollar has also driven hedge funds to step into the oil futures market.

With gasohol prices Bt3.50 cheaper than petrol, PTT enjoyed a 20-per-cent increase in gasohol demand last month, from 50 million litres a day to 60 million on average.

The drop in income to the Oil Fund from the 40-satang reduction will delay full payment of its debt by a month, but Piyasvasti insisted it would not derail the plan to finance rail lines nationwide. Under the ministry's plan, once the Bt5.5 billion debt is cleared, one-third of income will go to rail projects.

Upward movement

 Price (per barrel)

Fuel type Nov 9, 2007  2006 peak

Octane-95 petrol  Bt31.69  Bt30.59

Gasohol 95  Bt28.19 -

Diesel  Bt28.64  Bt28.34

Biodiesel B5 Bt27.64  -

Fuel type  Nov 8, 2007  2006 peak

Dubai crude US$88.82  US$72.29

Refined petrol*  US$101.65  $90.65

Refined diesel* US$108.44  $89.79

*Singapore prices

Source: Energy Ministry

 Business Desk

 The Nation