Oil refiners say they will co-operate with the Energy Ministry to stop exporting liquefied petroleum gas (LPG) or cooking gas and begin meeting rising local demand instead.
Each refiner has been gradually reducing LPG exports to help solve the shortage in the domestic market, even though revenue from local sales is relatively lower than from exports, according to Chainoi Puankosoom, the president of the Federation of Thai Industries' oil refinery club.
All refineries are likely to stop exporting LPG by the end of this year since local demand is growing rapidly.
However, high refining margins could help offset the shrinking revenue from LPG exports. The club has asked the government to raise the price ceiling of LPG or look at ways to dampen the fast-growing demand as it feared Thailand could become an LPG importer.
Mr Chainoi, who is also the president of Rayong Refinery Plc, said all oil producers were closely watching the sub-prime credit problem in the US for fear that it would hurt the world economy and reduce oil demand.
Before the sub-prime issue surfaced, oil demand this year was forecast to increase 2% because first-quarter demand grew 1.7% due to the weaker US dollar and growing world economy that resulted in high refining margins.
Oil exports in July dropped 52% from 15.69 billion baht in the same month of last year to 7.44 billion baht. Oil export volume decreased to 14.9 million litres per day from 27.1 million litres due mainly to the partial shutdown of Thai Oil's refinery in July, resulting in lower benzene production.
Viraphol Jirapraditkul, director-general of the Energy Policy and Planning Office, said demand for LPG had been rising steadily because more consumers were switching to cheaper LPG to fuel their vehicles.