Bangchak cuts output

Company president Anusorn Sangnimnuan said that in the past two months, overall fuel consump¬tion had dropped 510 per cent from the previous year, or about 23 million litres a day.

Demand for petrol and diesel in the period dropped to between 67 million and 68 million litres a day. He attributed the drop to skyrock¬eting oil prices that encouraged the public to cut consumption and switch to alternative fuels like nat¬ural gas, liquefied petroleum gas, gasohol and biodiesel.

"Several refineries are in the adjustment period, either to reduce capacity or export excess supply. Bangchak chooses to reduce capac¬ity," he said.

Despite weakening global oil prices, Anusorn expects the uptrend to be renewed and oil pro¬ducers likely to maintain their product prices above US$100 (Bt3,300) per barrel. Crudeoil prices have eased to about $120 a barrel, and if the downtrend con¬tinues over the next day or two, Bangchak will likely further slash pump prices of all fuel products by 60 satang a litre.

Anusorn also suggested the Energy Ministry adjust the oilsale contribution structure while the crude price is falling. The Oil Fund now subsidises biodiesel B5 by Bt1.50 a litre, and to support the fund's finances, subsidies could be cut. Under this proposal, when crude oil drops further, motorists will witness no change in retail prices.

The Energy Fund Administration Institute, which manages the Oil Fund, earlier said the fund's finances could be in the red soon, due to the narrow gap between revenue and expenses. The fund now earns Bt3.45 per litre from 95octane petrol, Bt3 from 91octane petrol and 25 satang from gasohol 95. But it must sub¬sidise the sale prices of gasohol 91 by 25 satang a litre, gasohol E20 and diesel by 30 satang and biodiesel B5 by Bt1.50.

More subsidies are expected as new alternative fuels like gasohol E85 are marketed. Bangchak will be a pioneer in this product, with the sale of E85 fuel at one or two sta¬tions from October. It will be avail¬able at more stations, in line with the number of E85 vehicles.

"Since oil prices could escalate on future violence, the ministry should seize this opportunity to col¬lect more money for the Oil Fund, in order to maintain its financial health," Anusorn said.