The subsidy for diesel… will continue after july

You might remember that diesel is subsidized since march for 0,90 THB per liter (the gvt reduced the tax per liter designed to pay back the Oil Fund, debt inherited from previous… gasoline subsidies, when Thaksin was Prime Minister)…

The subsidy was supposed to end in… july.

At that time, I wrote : “So, let’s see… What will happen in july ? Santa Claus will become Santa Closet (after a sex-change operation) ? Crude oil will go back to 70 USD per barrel, with the “driving season” kicking in the USA ? Yes, sure. The global recession will cut demand ?

3 months later… I must confess : Santa Claus is Santa Closet indeed. But oil didn’t go back to 70. I was right. We are today… at 140 USD per barrel (and counting, this morning, intraday, new record at 141,60). 😉

The diesel price subsidy programme for motorists, set to expire in July, is likely to be extended as the Energy Ministry is trying to deal with the record price.

Energy Minister Poonpirom Liptapanlop said she was considering whether the reduction of 90 satang per litre on the retail diesel price, funded by the state Oil Fund and the Energy Conservation Fund, should be extended or even increased.

”Worse still, the diesel price has reached a record high at above 42 baht a litre. We don’t think it is a good idea to let motorists struggle with diesel prices jumping right now,” she said yesterday. (Bangkok Post)

It’s not a surprise of course… And this -expensive- game is likely to continue.

The government is under severe, extreme pressure (censure debate, scandals etc.)… inflation explodes… they just can’t scrap the diesel subsidy. It’s just impossible.

However, we need to understand that it’s the worse policy possible… It will get us and them… absolutly nowhere (maybe… Zimbabwe).

Unless, you continue to believe in Santa Claus… and a barrel of oil at 50 USD in 6 months… 😉

Interesting times…

[reminder : some corporations enjoy also a subsidy on diesel : bus companies, fishermens, trucking companies etc. read here]

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