Korn Chatikavanij, Deputy Leader of the Democrat Party, has called on the Thai government to investigate the profits of oil refineries rather than depending on donations from operators to help alleviate the economic burdens stemming from rising energy costs. This statement was made in a Facebook post on Saturday, where he emphasized that the government should cease its "shy requests" for donations.
Korn pointed out that refining margins have at times risen to 17 Thai Baht per liter, compared to 2-3 Baht before the outbreak of the war in the Middle East. He clarified that oil refineries in Thailand claim that refining margins are not profit margins, but include many other costs such as transportation and insurance, which have increased due to the war.
Details of the Event
Korn asserted that the government should rely on an investigative committee to determine whether refinery profits are excessive, instead of depending on voluntary cooperation from companies. He noted that refineries are publicly listed companies and thus should be accountable to shareholders. Any "informal arrangement" could expose executives to legal risks, stressing that good governance requires the fair and legal use of governmental power.
Korn also warned the government against delaying necessary actions to alleviate public pressure, recalling a previous experience in 2022 following the Russian invasion of Ukraine, when prices surged significantly. He recommended that Finance Minister, Arkhom Termpittayapaisith, study that experience.
Background & Context
In 2022, refineries agreed with the government to contribute approximately 8 billion Baht monthly for three months, totaling 24 billion Baht. However, only several hundred million Baht were paid, not all companies participated, and payments were made for a limited number of installments before the issue faded from public interest. Korn mentioned that the community never learned whether the fuel pricing structure was truly flawed or how it was, a question that remains unanswered to this day.
He also indicated that the government should avoid repeating the strategy of buying time, after the Energy Minister directed a search for cooperation from refineries to channel excess refining profits into the oil fuel fund to assist the public.
Impact & Consequences
The fund's deficit has exceeded 50 billion Baht due to rising costs of supporting local fuel prices since the beginning of the war in the Middle East. The fund management has been forced to reduce support to maintain financial stability, leading to further increases in pump prices. Diesel prices have risen four times this week and are now 60% higher compared to what they were on February 28.
Arkhom, in his capacity as Deputy Prime Minister and Finance Minister, stated that the committee studying the fuel pricing structure has decided to adopt an approach similar to that called for in the Cabinet's decision in June 2022, to provide rapid relief to consumers. He confirmed that detailed figures regarding fuel pricing practices and any "unnecessary costs" will be presented to the Cabinet on Monday for urgent consideration.
Regional Significance
The issue of rising fuel prices is sensitive in many Arab countries, which are facing increasing economic pressures due to rising global energy prices. The shift towards investigating oil company profits instead of relying on donations could serve as a model that some Arab countries can benefit from in addressing economic crises.
In conclusion, the current situation in Thailand necessitates serious steps to investigate oil refinery profits, which could help alleviate economic burdens on citizens. Transparency and accountability in this vital sector will be essential to ensure economic fairness.