Government prepares gradual petrol price rise as oil crisis deepens

Transport Minister Phiphat Ratchakitprakarn and Energy Minister Auttapol Rerkpiboon on Monday (March 9) gave an update on measures to manage energy prices following the impact of unrest in the Middle East.

The remarks were made after a meeting of the Centre for Monitoring and Managing the Situation of the Middle East Conflict at Government House in Bangkok.

Phiphat said discussions had covered measures related to petrol, diesel and gas prices. He noted that, although the Energy Ministry had announced three days earlier that diesel prices could be held steady for 15 days, there was now growing concern over how long this could be sustained if the crisis continued without resolution.

He said the meeting concluded that, if the situation became more severe and remained unresolved, the government would likely begin raising petrol prices gradually rather than imposing a sharp increase of 2-3 baht per litre at once. 

Any adjustment would be made step by step in line with oil market mechanisms.

“For petrol, unlike diesel, there has been no formal price freeze. In the past, the Oil Fuel Fund has been used to help cushion price rises. However, as the violence continues with no clear end in sight, the government may need to announce petrol price increases in line with market mechanisms. Even so, any increase will be made step by step,” he said.

The government insisted that national fuel stocks remained sufficient. It said reports of some filling stations running dry were caused by panic buying, which had disrupted delivery schedules, rather than by any shortage of oil in the country.

Industrial users seeking to purchase fuel were advised to contact provincial energy offices or major oil traders in their area so they could buy at prices set by the Energy Ministry, rather than relying on retail forecourts, which were intended to serve the general public.

Auttapol said that, up to now, the government had used the Oil Fuel Fund to help support both diesel and petrol prices. However, with global oil prices continuing to rise, support for petrol would now be only partial, meaning retail prices could edge up in line with market conditions.

He said the government would continue to avoid sudden spikes by implementing gradual adjustments instead, in order to prevent public panic.

The meeting also agreed to switch the biodiesel mix in diesel from B5 to B7, containing 7% biodiesel, with effect from March 14. Auttapol said there was sufficient crude palm oil available to support the new blend.

E20 to be made cheaper

For petrol, the government will promote the use of gasohol E20 by making it more affordable, in a bid to reduce fossil fuel consumption and extend oil reserves.

The Energy Ministry will widen the price gap between E20 and E10 to 3 baht per litre, up from 2 baht, in order to encourage more motorists to switch to E20. Support for E85 will also continue, which the government said would help both consumers and Thai farmers.

LPG price freeze extended

The government will also extend the freeze on liquefied petroleum gas (LPG) prices for a further two months, from the end of March until May, in an effort to ease living costs and reassure the public that prices will not rise during this period.

Energy-saving measures to go before Cabinet

In addition, the Energy Ministry will submit energy-saving measures to Tuesday’s Cabinet meeting. 

The initial focus will be on seeking cooperation from government agencies, including setting air-conditioning temperatures at 26-27C, relaxing formal dress requirements such as suits and ties, switching off unnecessary lights, and promoting work from home and online meetings to reduce travel.

For the public, the government will initially rely on campaigns and voluntary cooperation before considering mandatory measures, depending on future price developments.

Oil fund ready to borrow more

Auttapol also responded to questions about the Oil Fuel Fund, saying it had now slipped slightly into deficit after previously showing a surplus of more than 2 billion baht before the latest escalation in the Middle East.

He said the government had prepared for the situation by discussing the possible issuance of an emergency decree allowing the Finance Ministry to guarantee loans, which could provide additional funding to help stabilise energy prices. 

Preparations had already been discussed with relevant agencies and the secretary-general of the Council of State.

As for fuel and gas procurement during the crisis, the Prime Minister has signed an order suspending oil exports to foreign countries, with the exception of Laos and Myanmar. Oil traders have also been instructed to raise legal reserve levels from 1% to 3%, to be increased gradually to 1.5% by the end of March and to the full 3% by the end of April.

The move is expected to extend the domestic oil supply by around seven more days.

PTT seeks new oil and gas sources

On the search for new oil import sources, Auttapol said that, in addition to traditional crude oil supply channels, PTT was now sourcing from other countries including the United States, South Africa, Malaysia and Australia.

He said purchases from Russia would need to be considered carefully because of the risk that sanctions could disrupt financial transfers.

On natural gas and fuel for power generation, Auttapol said that under the original plan Thailand had expected five LNG cargoes from Qatar, but only two were able to depart. PTT has therefore moved quickly to secure alternatives, with two replacement cargoes already confirmed and a third still being finalised.

For May deliveries, a meeting will be held next week to identify new markets to replace Qatari supply.

To increase production in Thailand and the region, operators in the Gulf of Thailand and the Thailand-Malaysia Joint Development Area (JDA) have been asked to raise output, and both have confirmed that this can be done.

Thailand has also coordinated additional purchases of hydropower from Laos, while the Electricity Generating Authority of Thailand has been asked to increase electricity generation from coal-fired power plants.

“All of the additional gas volumes secured are equivalent to two LNG cargoes, giving us confidence that there will be sufficient fuel for electricity generation over the next two months, March and April,” Auttapol said.