Oil price warning: Cheap era over for at least two years

Finance Minister Ekniti Nitithanprapas has rejected calls for an excise tax cut on refined oil products, saying that such a move would affect medical services and warning that the era of cheap oil prices is over, at least for the next two years, due to damage inflicted on oil infrastructure in the Middle East.

During a debate in parliament last night, he explained that an excise tax reduction is similar to using the Oil Fuel Fund to subsidise oil prices to keep them unrealistically low, thereby cushioning the impact on consumers.

He said that a portion of the excise tax is allocated to medical services, the costs of which are rising every year. Therefore, cutting the tax would reduce the budget available for state hospitals, medical personnel and other healthcare expenses.

As finance minister, he said his responsibility is to take care of all groups, adding, however, that, amid uncertainty over the war in the Middle East, the government must work hard to guide the country and its people through the crisis.

Meanwhile, Democrat MP Korn Chatikavanij argued that Ekniti should not have claimed that excise tax on oil products is used to fund medical services, noting that the tax goes to the exchequer before being allocated to various agencies.

If people had a choice, they would opt for a cut in oil prices, Korn said, pointing out that the 2 baht-per-litre cut in ex-refinery fuel prices, as agreed by Energy Minister Akanat Promphan and refinery representatives, is too small and should have been 12 baht per litre.

He added that, although the ex-refinery price was cut by 9 baht per litre yesterday, retail pump prices were reduced by only 2.14 baht per litre.

He said the average Gross Refining Margin (GRM) is 17 baht per litre and, therefore, the ex-refinery price should be reduced by 12 baht per litre.