Chart : retail prices of diesel and other fuels until july, and impact of the subsidy policy

Here is an update of my chart about the retail prices of fuels (from PTT, and for Bangkok, THB per liter).

Source PTT.

It was important to show july 25, when we had the tax cuts decided by the government (on diesel and gasohol, -2,30 THB per liter of diesel for instance).

This chart allows us to… calm down our enthusiasm. Why ?

-as you can see, for diesel and gasoline 91 (regular) we are back… to may 2008 levels. Great. If we compare with january 2006 levels, the increases of prices remain massive.

-then, we have to repeat that the 3 main fuels used for vehicles in Thailand are diesel and regular gasoline and LPG. Look at this chart (datas of may, source EPPO) (NGV is missing, but its volume remain small, eventhough it increases rapidly, “Currently, the number of NGV-installed vehicles in the country totals 93,000 units. The number of vehicles seeking NGV installation increases to 400 units per day from less than 100 units in 2006” source TNA).

-prices of LPG (for vehicles) will increase in… august.

-only a small number of people (with new cars) will enjoy the tax cuts on gasohol (91 and 95) and E20 (mixing of gasoline + 20 % of ethanol).

-distribution of E20 remains… virtual upcountry.

-and overall, we have to repeat that those tax cuts are for… 6 months.

So again, don’t believe that the “tax cuts party” since last week is going to change fundamentally the situation… from an economic point of view. The subsidy policy is just a quick fix of “feel good” dope.

The only thing that could change really the situation is a massive decrease of oil prices on the world market. Currently we are at 125 USD per barrel.

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