Ready for the hit on the back ? Prices of LPG to go up by 33 %

It was written… announced since last… aprilDelayedpostponed… Over and over… Too sensitive… Blablablabla. The thai politicians went for the head into the sand strategy… even for a few months… 5 more minutes mister executioner. Please.

In vain.

The price of liquefied petroleum gas (LPG) for transport and industrial use will go up by Bt6 a kilogram, or 33 per cent, in the next three months, the National Energy Policy Committee said Thursday.

The price will be raised Bt2 per kilogram each month until it reaches Bt24.13.

Energy Minister Wannarat Charnnukul said the date when the price increase is to take effect will be announced next week. (Nation)

I can hear the screams. “But how come ? Prices of oil are tumbling ! ?” Indeed, LPG is a sub-product of crude oil.

But let’s not forget that LPG was and is still heavily subsidized !

The oil bubble of spring-summer has forced many people to switch to LPG and NGV… Inflation peaked. But it was a trap. The demand was just too high, forcing PTT to import more and more LPG at full market price.

From an historic point of view, the thai gvt agreed to subsidize LPG because it was produced locally… But then demand went up… It was then necessary to import.

Economy 101. Market distorsions… There is no free lunch. Eventually, someone has to pay.

Next : diesel… The big tax cut decided by Samak end of july, for 6 months… will end. It make holes into the state’s revenues.

Next : NGV. Here too the subsidy is just too massive. They want to go to 12 THB per kilo, an increase of 41 %.

Energy is the weak point of the country (energy intensity). Thai drivers and businesses have been drugged with artificially low prices. It is sustainable for some time… But not eternally.

Sure this problem seems suddendly less urgent… Oil prices are falling, so why bother ?

But the problem is likely to return. With a vengeance.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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