BANGKOK, Thailand – An academic expert emphasizes that the Fuel Fund’s deficit is poised to surpass the 50 billion baht threshold should current subsidy levels persist.
It is recommended that the administration allow a strategic adjustment of fuel and consumer goods prices to mitigate the fund’s escalating financial liabilities.
Prof. Dr. Praipol Koomsup, a distinguished independent energy economist and former advisor to the Minister of Energy, observes that the protracted conflict in the Middle East is precipitating a global energy crisis.
He forecasts that international crude oil prices may breach the 100 US dollars per barrel mark, with a sustained upward trajectory expected.
At present, the Fuel Fund provides a diesel subsidy exceeding 20 baht per liter, necessitating a daily liquidity injection of no less than 2 billion baht.
With the fund’s current deficit already surpassing 12 billion baht, a continued stalemate over the next two to three weeks could drive the shortfall beyond 50 billion baht. Consequently, the government is urged to facilitate a gradual increase in domestic energy and commodity prices to alleviate the fiscal burden on the fund.
Furthermore, given the potential for regional instability to endure, additional fiscal interventions are proposed, including further excise tax remissions and the rigorous promotion of national energy conservation initiatives.
Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC), recently presented comprehensive economic impact assessments to the Cabinet regarding the surge in energy costs following the Middle East conflict. Since February 27, global markets have witnessed a continuous appreciation in oil prices.
The Dubai crude benchmark has reached approximately 154 US dollars per barrel, representing a 125% increase. Simultaneously, Singapore refined petroleum prices have stabilized above 190 USD for three consecutive days, a 100% appreciation compared to pre-conflict levels.
The NESDC evaluates three distinct scenarios to quantify the repercussions on the Thai economy and to provide a framework for future state intervention. Under Scenario 1, hostilities are expected to conclude within one month, potentially by mid-to-late April.
This projection assumes a diplomatic resolution driven by internal pressures and the restoration of maritime logistics through the Strait of Hormuz.
In this instance, the annual average crude price is estimated at 85 USD per barrel, up from the initial forecast of 58–68 US dollars. This adjustment is anticipated to drive Thailand’s inflation rate upward by 1%, relative to the baseline forecast of -0.3% to 0.7%.
In Scenario 2), a three-month protracted conflict is envisioned, exerting a more profound influence on the global economy.
Under this scenario, annual average crude prices are expected to fluctuate between 95–105 USD per barrel, potentially propelling Thailand’s inflation to 1.9%.
Such conditions risk inducing global recessions and a period of economic “stagnation,” marked by elevated unemployment and inflationary pressures, which would severely impact both international and domestic markets.
In Scenario 3, the most severe outlook involves a broad escalation into a large-scale regional war. In this worst-case scenario, annual average prices are projected to exceed 120 US dollars per barrel, causing inflation to surge significantly beyond the 1–3% target range.
Given the volatility of such an escalation, precise economic forecasting becomes exceptionally challenging, necessitating a focus on national self-reliance and strategic resilience.
Currently, a definitive assessment of the direct impact on Thailand’s Gross Domestic Product (GDP) remains elusive, as global trade patterns have yet to fully react to the evolving geopolitical landscape. (TNA)
