Thai Energy Minister, Akanat Promphan, confirmed that the government may need to extend biofuel price support beyond September to ensure energy security and reduce reliance on fossil fuels. This statement was made during a seminar on renewable energy at Chulalongkorn University, where the minister highlighted the importance of the support program funded by the Oil Fund in light of current geopolitical tensions.
The minister noted that global oil markets have experienced severe fluctuations due to the conflict in Iran, which has impacted oil production in the Middle East. He mentioned that Thailand's oil reserves cover 103 days of consumption, necessitating urgent actions to ensure stability in the local market.
Details of the Biofuel Support Program
The Thai government supports fuel mixed with higher proportions of biofuels, such as ethanol and methyl ester, making it cheaper than traditional fuels. For instance, E20 gasoline, which contains 20% ethanol, is sold at 36.3 baht per liter, while 95 gasoline, which contains 10% ethanol, is priced at 43.30 baht.
Moreover, B20 diesel, mixed with 20% methyl ester, is sold at 33.8 baht per liter, whereas B7 diesel, which contains 7% methyl ester, is priced at 40.8 baht. This support is considered vital under the current economic conditions.
Background & Context
The Oil Fund was established in 2019, and the support for biofuels was initially set to expire on September 24. However, the deadline has been extended twice previously, with the support originally scheduled to end in 2022. The minister confirmed that geopolitical tensions and instability in oil supplies necessitate another extension.
Akanat stated, "To continue the support program, the government may need to impose an executive decree that can take effect immediately, as amending the Oil Fund law could take years, which does not align with the rapidly changing situation in the Middle East."
Impact & Consequences
Thailand benefits from biofuels despite seasonal fluctuations in crop prices, with the minister adding that promoting biofuel use supports farmers and reduces dependence on imported fossil fuels. Even after the conflict in the Middle East ends, Thailand will continue to promote biofuel usage due to uncertainties in global tensions.
The minister also pointed out that ethanol and methyl ester have potential applications beyond energy, as they can be used as raw materials for skincare products, reflecting the versatility of these materials.
Regional Significance
This decision represents a strategic step to ensure energy stability in Thailand and reflects the challenges faced by countries amid geopolitical fluctuations. The extension of biofuel support not only addresses immediate energy security concerns but also promotes sustainable agricultural practices.
In conclusion, the Thai government's proactive approach to extending biofuel support underscores its commitment to energy security and economic resilience in a volatile global landscape.