Bangkok:Thailand's current oil pricing structure is under strain, with further reductions posing potential risks to the public. Assistant Professor Wanwichit Boonproong from the Faculty of Political Science at Rangsit University highlighted the challenges the country faces in managing oil prices amidst pressures from rising living costs.
According to Thai News Agency, Assistant Professor Wanwichit emphasized the limitations of Thailand's oil pricing structure following government measures aimed at reducing costs and easing the public's burden. These measures include adjustments to the refinery pricing formula, reductions in excise taxes on specific fuels, and the use of the Fuel Fund to stabilize prices.
Assistant Professor Wanwichit noted the complexities involved in calls for further price reductions, pointing out that Thailand's reliance on crude oil imports and global market links complicate the situation. He highlighted that retail fuel prices are influenced by various factors, including the cost of fuel, taxes, the fuel fund, and marketing costs, each playing a significant role.
Moreover, he addressed the proposal of eliminating Singapore's refinery price as a reference, explaining that while it could be considered a policy adjustment, it would not necessarily lead to immediate price reductions. The Singapore market price serves as a key benchmark in Asia, and Thailand's dependence on imported crude oil means that any pricing changes must consider global market conditions.
The government's recent measures included restructuring oil prices by removing certain hypothetical expenses from the refinery price calculation, resulting in a cost reduction of approximately 8.75-35.48 satang per liter, equivalent to about 10,839 million baht annually. Additionally, temporary excise tax reductions on B20 diesel and E20 gasoline have been implemented from October 2026 to January 2027, leading to decreased retail prices for these fuels.
Assistant Professor Wanwichit cautioned that proposals to reduce or abolish excise taxes could significantly affect government revenue and its ability to fund public services. He also discussed the potential impact of abolishing contributions to the Oil Fund, which might lower some fuel prices short-term but would limit the fund's ability to manage future energy crises.
He further warned that reducing fuel taxes without alternative revenue sources could necessitate a VAT increase from 7% to 10%, potentially burdening households, particularly low-income groups. Assistant Professor Wanwichit emphasized the need for a balanced approach in energy price management, considering both short-term public assistance and long-term fiscal stability.
He concluded by urging a comprehensive view of energy policy, considering not only fuel prices but also energy security, government revenue, and the overall cost of living. While lowering fuel prices could benefit the public now, it is crucial to weigh the potential future tax increases and their impact on the population.