- Posted January 16, 2014 by
ENERGY MUST BE REFORMED TO REFORM THAILAND (1)
I agree with the policy Yingluck used for her campaign in 2011 about bringing down people’s cost of living by terminating the Oil Fund. This would reduce gasoline prices immediately by 2.20 to 7.50 baht. Yingluck very much understands that price of oil is a direct cost of goods of all kinds according to her campaign as follows:
“Brothers and sisters, if Pheu Thai Party has a chance to form a government, the first thing we will do is solve your cost of living and economic problems. This will be done through giving up the Oil Fund to bring gas prices down. Brothers and sisters, that will reduce gas prices.”
But once Pheu Thai really became a government, there was a brief promotion of just a few months to stop the Oil Fund levy according to her campaign. The levy was returned once again after that and it was even higher than before. Collection of 7.50 baht a liter for gasoline 95 used to be the case but it is now 10 baht a liter.
Campaign posters from Pheu Thai Party for the election on Feb 2, 2014 have only a broad message like “Please give us a chance to work to continue our original policy.”
People have to guess whether or not the “original policy to bring down cost of living by giving up the Oil Fund used for campaign in 2011 that is yet unfulfilled is still the policy Pheu Thai Party will carry on.
Or there may be 3 main policies to carry on:
1) Amending the Constitution to tighten government power.
2) Nullifying all the corruption cases of Pol. Lt. Col. Thaksin Shinawatra, both already adjudicated and still pending.
3) Offering populist policies with loopholes for massive corruption for political payback like Rice Scheme, 2-trillion-baht Loan Project, and 350-billion-baht Water Management Project, etc.
If Yingluck actually wants to reform the country by acting as the host like what she announced, the first thing she should do is give up the Oil Fund according to her campaign.
Gas price will drop immediately. Prices will drop by 1.20, 3.30, and 10 baht per liter for gasohol 91, gasohol 95, and gasoline 95, respectively.
Once the Oil Fund is terminated, the dropping gas prices will reduce people’s cost of living as the first step.
The structure of gas prices tied to the Oil Fund has been distorted because money is taken from the fund to offset E85 by 11.60 baht a liter. There is also collection of as much as 5.80 baht a litter for marketing cost.
How is it possible that E85 gas with only 15% of gasoline and 85% of ethanol is sold for as much as 27.71 baht a liter at refinery? That price is higher than 25.30 baht a liter for gasoline.
Price of renewable energy like ethanol from plants and molasses has been made more expensive than gasoline from fossil so that profit is made at multiple levels and to elicit money from the fund to offset the cost of E85 by 27.71 baht a liter for people to buy it at 24.58 baht a liter. Money of as much as 11.60 baht a liter is used and 5.80 baht collected for marketing cost.
The Oil Fund being used to offset LPG and purported to help LPG consumers and car drivers has in fact been used to compensate refineries and petroleum industry since 2007. Details will be explained in the next installment.
The Ministry of Energy has begun to gradually raise the price of household LPG since September 2013. It is purported to reduce the burden on gasoline consumers who have to pay into the oil fund to support LPG users.
However, once cooking gas price has been increased, the Oil Fund levy has not been reduced. Furthermore, it has been increased from 7.50 to 10 baht a liter just like in the latter half of 2013.
Therefore, the excuse to raise prices of LPG to be fair to gasoline users is not true because money is still collected from gasoline users into the Oil Fund, and more is being collected.
Using the Oil Fund to offset E85 and E20 by claiming that it will promote renewable energy does not make sense when those are more expensive than energy from fossil fuels. This is believed to be undue exploitation.
When more money is collected from cooking gas users into the Oil Fund and LPG offset is reduced because price of cooking gas is increased, there must be a way to pull money out of the Oil Fund by 11.80 baht a liter to offset E85. So, the Oil Fund is used as a tool to distort prices of gasoline and cooking gas. It is a highly sophisticated machination dissimulated to elicit money from consumers’ pockets.
The Oil Fund should be called a fund to maintain profitability of the energy business sector. That will be most accurate.
So, to be fair to gasoline users, the Oil Fund must be terminated. This is the first step to reform energy to be fair to people. It will reduce cost of living.
Solutions for problems caused by prices tied to the Oil Fund will be discussed in the next part.