Energy authorities are contemplating imposing a cap on the price of oil sold by Thai refineries in an effort to better control energy inflation, with current measures to address the issue set to expire this month.
Energy Minister Supattanapong Punmeechaow stated that a working group has been established to study how to reduce the oil refinery margin, which has increased from an average of two baht per liter to five baht per liter in recent months.
The group is examining energy and consumer protection laws and contemplating a call for cooperation among oil companies to implement a temporary refinery margin intervention, which should result in a decrease in the retail price of oil.
The refinery margin is a component of the retail oil price that motorists pay at gas stations; it is a cost added to the price of crude oil during the refining process.
Since October 2021, the government has capped diesel prices by using the Oil Fuel Fund and reducing diesel excise taxes to support its price subsidy program.
The Oil Fuel Fund has been used to cap the prices of diesel and liquefied petroleum gas which is used for cooking. The fund’s cash reserves are only 9.7 billion baht, while its deficit is over 81 billion baht.
As the impact of the Russia-Ukraine conflict continues to keep global oil prices high, experts say it remains to be seen whether the government will renew the subsidy program with a similar or lower amount of financial aid than the most recent version. (NNT)