Thailand is considering lower oil taxes and payments to its Energy Conservation Promotion Fund as a last-resort response to elevated global prices and rising domestic fuel costs, Energy Minister Akanat Promphan said Thursday.
He spoke at the Federation of Thai Industries’ Energy Symposium, where he said officials may need to consider further steps if global prices keep climbing. Possible measures include reducing fuel taxes and payments into the fund. Akanat did not specify the scale of any cuts. He cautioned that lower charges might offer only brief relief if crude prices rise sharply, and said the government wanted to ease pressure on households and businesses without making intervention financially unsustainable.
The Bangkok Post reported that the government had required refiners to lower gross refining margins (GRMs), a measure comparing refined-oil prices with crude costs. The newspaper said the measures’ combined cost exceeded 30 billion baht from March through September. Akanat said margin changes alone might not keep domestic fuel prices from rising if international oil prices continue climbing. The effect of either measure also depends on global prices, exchange rates and local pricing policy, the paper reported.
An oil trader who spoke anonymously told the Bangkok Post that cutting taxes and fund payments could reduce charges included in pump prices. The trader said the reductions could also leave fewer public resources for energy conservation, efficiency improvements and renewable-energy development.
Diesel powers transport, logistics, farming and industrial activity in Thailand, so higher prices for the fuel can add to inflation, the Bangkok Post reported. Market analysts cited by the newspaper warned that a deeper Middle East conflict could put further pressure on diesel prices by disrupting oil production, export flows or shipping routes.
EconoTimes’ earlier reporting on Thailand’s excise-tax contingency covered an energy official’s description of tax cuts as a fallback if oil moved toward $200 a barrel. Officials and oil executives also warned that additional subsidy borrowing could strain public finances.
