Chairman of the FTI Supant Mongkolsuthree explained that higher oil prices will increase production cost and prices of goods, while a sluggish economy will partly affect the baht’s value, reports state news agency NNT.
The Energy Policy Administration Committee resolved earlier this month to cap the diesel price at 30 baht per litre starting on Monday (Oct 11) until the end of this month as part of the effort to ease the impact of increasing oil prices in the global market.
Meanwhile, the government has acted to cushion fuel prices and to reduce the diesel price by one baht, easing the strain on people’s cost of living amid continually rising global oil prices.
The Ministry of Energy attributes the rising global oil prices to increased demand, NNT noted in a separate report.
Deputy Prime Minister and Minister of Energy Supattanapong Punmeechaow said the oil price in the world market has risen by US$4-5 to US$40 per barrel, while prices of natural gas and coal have also risen.
Prices continued to rise despite the OPEC group having ramped up production by 400,000 barrels per day. The energy minister said this prompted the government’s move to cushion oil prices, especially the widely used Diesel B7. He noted that the government had been encouraging B7 users to switch to Diesel B10, as the latter was cheaper than B30 per litre, but there were still some issues hindering the switch.
The minister said the Oil Fund currently has a little more than B10 billion remaining, and if the amount proves insufficient then borrowings can be made.
However, he believed the current fuel prices situation had to do with fast-changing and cold weather in several regions of the world. Oil production in the United States and Russia have thus been impacted, while in Europe the demand for fuel has caused oil prices to increase by two- to threefold.
He expected the government’s temporary reduction this month of biodiesel offerings to only B6 to quell rising diesel prices.