Photo Credit: Thai Oil
The Thai government is preparing to reduce domestic fuel prices by reassessing what it considers “unnecessary” cost components within the national pricing structure.
Finance Minister Ekniti Nitithanprapas said on Thursday that the Ministry of Energy will recalculate oil refining and marketing costs by Monday, a move expected to lead to a swift decline in retail energy prices.
His remarks came shortly after diesel prices rose by 3.50 baht per litre to 44.24 baht nationwide, while petrol prices increased by 1.20 baht for most grades.
Mr Ekniti, who chairs a newly established committee tasked with reviewing fuel pricing structures, said current refining-related calculations may be overstated under prevailing conditions. As a result, pump prices paid by consumers should be lower.
The committee has determined that both refinery margins and marketing margins warrant downward revision, noting that existing pricing mechanisms no longer reflect current market realities and still incorporate distortions from earlier periods of volatility.
Although Prime Minister Anutin Charnvirakul had given the committee 15 days to complete its review, the process has been accelerated, with initial findings expected to be submitted to the cabinet by Monday.
Discussions have involved refinery representatives and senior policymakers, with the review also covering the criteria used to determine wholesale and retail fuel prices under existing fuel trade laws.
On marketing margins, officials acknowledged fluctuations driven by the spread between wholesale and retail prices. While these margins vary daily, the year-to-date average stands at 1.95 baht per litre—below the previously studied benchmark of 2.45 baht, which accounts for operating costs such as rent, utilities and staffing at service stations.
Refining margins have been more contentious and widely misunderstood. Prasert Sinsukprasert, permanent secretary for energy, clarified that the reported margins of 13–14 baht per litre should not be interpreted as pure profit. Instead, they represent the spread between crude oil and refined product prices, reflecting higher input costs and premiums during periods of supply disruption. Historically, average margins have been closer to 2.45 baht per litre under normal market conditions.
The Petroleum and Energy Institute of Thailand has also rejected claims that refiners are earning windfall profits, noting that headline figures cited in public debate do not accurately represent net profitability.
The government is now seeking to verify the extent of the so-called “war premium” and other additional costs, including freight and insurance, to better understand the true cost burden on refiners.
Diesel prices in Thailand have surged nearly 50% since February 28, when escalating conflict between Israel, the United States and Iran triggered a global energy crisis.
Meanwhile, the Oil Fuel Fund has accumulated a deficit of 47 billion baht due to ongoing price subsidies. It is reportedly seeking government-backed loans of up to 150 billion baht to stabilise its financial position.