Bangkok LPG retailers in survival mode

After a few good years, liquefied petroleum gas (LPG) retailers in Bangkok are now suffering a sharp fall in demand, forcing operators to diversify business and seek ways to survive.

The slowdown in demand could also force small players to merge with larger ones next year, industry officials said. LPG retailers in the transport segment have felt the pinch from the sharp fall in global oil prices, which are unlikely to revisit the record highs of over $US100 a barrel, making the price of LPG uncompetitive and encouraging motorists to switch to oil

The gradual removal of the universal government subsidy on LPG prices, which began in 2015 and fully completed in the second half of this year, was a further blow to the LPG market.

The boom in LPG retail started when global oil prices surged above $US100 a barrel, while the price of LPG, known as "cooking gas", was capped at fixed price by the government in an effort to curb the rise in costs of living. LPG prices continued to be fixed for about a decade.

Global prices slumped in 2014, plunging from a record high of $US147 a barrel early in the year to $45-$50 a barrel and was forecast to stay below $60 a barrel for years, encouraging many of motorists to switch back to oil.

As of October this year, the number of LPG stations stood at 1,870 stations, down from 2,400 stations during the LPG boom in 2013.

The volume of LPG sales through retail stations dropped by 11%, indicating that more small LPG stations are out of business, while others are expected to switch to petrol.