B29 billion budget to cap diesel

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The Energy Policy Administration Committee has approved a budget of around 29 billion baht to cap the price of diesel at less than 30 baht per liter, on an order from Prime Minister Prayut Chan-o-cha.

Transport operators last Tuesday called on the government to cap the price at 25 baht per liter.

Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow said yesterday that the 30 baht threshold was the most appropriate and was a pragmatic compromise with their request.

Up to 20 billion baht of the budget will come from loans obtained from commercial banks while 9 billion baht will come from the State Petroleum Fund.

The budget will allow diesel price controls to last until March of next year.

Higher diesel prices will increase production and transportation costs.

Supattanapong said the relief measure is based on the possibility that world oil prices will return to normal levels after the winter when energy for heaters is in high demand.

He said if world oil prices exceed US $ 90 per barrel, authorities may have to reduce the excise tax on oil, which currently stands between 5.15 baht and 5.99 baht per liter.

Thai Oil Plc (TOP), Thailand’s largest oil refinery by capacity, estimates that global oil prices this week will be between $ 78 and $ 84 per barrel for the benchmark market in the western part of the country. Texas and between $ 81 and $ 87 per barrel for the Brent benchmark market.

Oil demand is expected to rise to meet a shortage of coal and natural gas in Europe and China.

During this week, oil, gas and coal prices will remain high due to the easing of lockdowns and increased travel.

The high oil prices are also due to the limited supply of crude oil to the oil cartels.

TOP said US oil reserves had returned to a level of 427 million barrels.

This is the same volume as before the country was hit by Hurricane Ida which forced many oil refineries in Louisiana to temporarily close.

More oil is likely to be added to the global oil market due to new production of crude oil in the United States, TOP said, citing a report by energy services company Baker Hughes.

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