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14 Aug 2009


Five Short-Term Fixes for Oil Prices: Some Long-term Snags Ahead (Business Brief No.2596)

Although the five government measures to alleviate consumer hardships due to high fuel prices, particularly with diesel fuel suit the unstable economic condition, they seem to be only short-term solutions that help us survive this recession. However, if crude oil prices rise to USD80-90/barrel or higher, the government will have to reconsider whether such subsidies should be continued or not, or how long they can be implemented and where the source of funds is, because the subsidy might have an effect on the government's financial status.

In order to alleviate the problem on oil price hikes over the long-run, KASIKORN RESEARCH CENTER (KResearch) views that the government can solve this problem in tandem with the development of our logistical infrastructure as stated in the ‘Strong Thai' economic programs, and accelerate alternative energy development projects in our 15-year alternative energy master plan. Those projects, when completed, would help reduce transportation costs within our country and reduce our dependency on the use of diesel fuel. Over the short-term, it is expected that the government would be able to gradually reduce their energy subsidies as our economy resumes normalcy, or shows some improvement. In the future, the government will have to consider revising our fuel price structure in order to be more in line with our energy saving plans.

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