Korn Chatikavanij, the Deputy Leader of the Democrat Party in Thailand, has called on the government to take serious steps to investigate the profits of oil refineries rather than depending on voluntary donations from operators. This statement was made in a Facebook post on Saturday, where he emphasized that the government should stop "begging" for donations from oil refineries and instead rely on an investigative committee to determine whether profit margins are excessively high.
Korn pointed out that refining margins have at times risen to 17 baht per liter, compared to 2-3 baht before the outbreak of the war in the Middle East. In this context, oil refineries in Thailand have confirmed that the overall refining margin is not the same as profit margin, as it includes many other factors such as transportation and insurance, which have increased due to the war.
Details of the Event
Korn stated that if the investigative committee finds that refinery profits are indeed high, the government must clearly communicate the findings and use its legal authority, rather than relying on voluntary cooperation that lacks a legal basis. He explained that refineries are publicly listed companies and must be accountable to shareholders, warning that any "informal arrangement" could expose executives to legal challenges.
Korn also warned the government against delaying necessary actions to alleviate public pressure, referencing a previous experience in 2022 following the Russian invasion of Ukraine, when prices surged significantly. He urged Finance Minister Arkhom Termpittayapaisith to 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, in reality, only several hundred million were paid, not all companies participated, and payments were made for a limited number of installments before the issue faded from public interest, as Korn noted.
Korn stated, "The community has never learned whether the fuel pricing structure is truly flawed, or how— a question that remains unanswered to this day." He pointed out that the lessons learned from 2022 should caution Arkhom against repeating ineffective time-buying strategies.
Impact & Consequences
The deficit in the fuel fund 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, which has driven pump prices even higher. Diesel prices have risen four times this week and are now 60% higher than they were on February 28.
In a related context, Arkhom, the Deputy Prime Minister and Finance Minister, in his capacity as head of the committee studying the fuel pricing structure, stated that the committee decided to adopt a similar approach to what was called for in the cabinet decision in June 2022, to provide rapid relief to consumers. Detailed figures on fuel pricing practices and any "unnecessary costs" will be presented to the cabinet on Monday for urgent consideration.
Regional Significance
This issue is particularly significant for the Arab region, where many countries are suffering from rising energy prices and their impacts on the local economy. The challenges faced by Thailand in dealing with rising fuel prices may be similar to those faced by other Arab countries, necessitating the exchange of experiences and strategies to alleviate economic burdens.
In conclusion, Korn's call for an investigation into oil refinery profits reflects the urgent need for transparency and accountability in the energy sector, which could serve as a model for other countries facing similar issues.