[Uplillacype]

Oil price movement in Thailand is in the same direction as world oil prices which the market mechanism based on production and some other factors such as speculation, consumption, exchange rates, situation in oil-exporting countries, etc.

Due to my work, I closely watched on NYMEX (New York Mercantile Exchange) crude oil futures in 2004, skyrocking oil prices due to vast speculation from hedge funds and strong global demand. Thai government implemented diesel price subsidy in early 2004 for hoping to maintain the economic growth, but this policy created a huge burden to the government’s state oil fund from the gap between the real diesel price and the subsidized price, thus this policy was ended a year later.

Retail oil prices in Thailand: Bangkok – lowest in the country as Bangkok is the main distribution center. Provincial areas – Bangkok price + transport cost.

Retail oil price structure in Thailand: Refinery price + Tax and Oil Fund + Market Margin.

We import crude oil > refinery process > refined oil products. Refinery price accounts for 60-70% of this price structure, changes in domestic retail prices heavily relied on the movement of world market prices.

Singapore is the regional oil trading center where reflects the real demand and supply in this region.

Soaring oil prices has significant impact on the automotive industry during the past few years, higher demand in eco-cars and fuel-efficient engines. As long as we still have poor public transportation, we will always see red-license plate car on the roads.