The global diesel price jump of US$2.74/barrel in a single day yesterday has caused serious concern at the Energy Mnistry, to the extent that it may have to allow domestic diesel prices to rise above the Bt30/litre ceiling.

An informed source in the ministry said that they may have to decide whether to maintain domestic prices at about Bt30/litre, through increased subsidies by the Oil Fuel Fund, or allow them to rise above, as the global increase yesterday was substantial.

Shortly before rise, the Fuel Fund Executive Committee, chaired by Energy Minister Pirapan Salirathavibhaga, decided to maintain the domestic diesel pump price at no higher than 30 baht/litre, after global diesel price on Tuesday closed at US$104.71/barrel, up US$0.69.

At this price, the source said that oil traders receive 1.45 baht/litre in oil marketing cost, but the Oil Fuel Fund will have to increase the subsidy for diesel by another 40 satang/litre, to Bt4.57/litre.

The source said that the situation is much worse today after global price increased by 2.74 dollars per barrel yesterday, adding that, if the local pump price of diesel is to be pegged at not more than 30 baht/litre, the Oil Fuel Fund will have to contribute an additional 40 satang/litre.

Currently, the subsidies on diesel and LPG have put the Oil Fuel Fund in the red to the tune of over 100 billion baht.

The source also said that the Energy Ministry has been trying to maintain the diesel pump prize at the current level as long as possible, particularly during the Songkran holiday period, with the expectation that global diesel prices may drop in the near future.

The Energy Ministry is also coordinating with the Finance Ministry to extend the excise tax cut on diesel by one baht/litre, which is due to expire on April 19.