Energy panel to meet refiners on ‘abnormal’ margins
The Energy Policy and Planning Committee has scheduled an urgent meeting this afternoon with representatives of six oil refiners to discuss the current oil crisis, the issue of the Gross Refining Margin (GRM) and the use of the Singapore reference oil price as benchmark for regional prices of refined oil products.
Energy Minister Akanat Promphan, who will chair the meeting, said that the Cabinet, at its special meeting last night, assigned the Energy Ministry to implement the recommendations made by the committee tasked with studying the production costs of refined oil products and to set their appropriate prices.
Akanat said the committee has observed that the GRM charged by the six oil refineries had skyrocketed from 2-3 baht/litre to 7 baht/litre in March and to 16-17 baht/litre in April, which he described as abnormal.
He pointed out that the ex-refinery prices of refined oil products do not reflect global crude oil prices, but are based on the Singapore reference, which is a problem.
He also added that the price of global crude oil has increased from an average of 70 US dollars/barrel to about 100 US dollars/barrel, whereas the price of refined oil products, such as diesel, has surged from about US$100/barrel to about US$300/barrel, which is an “astronomical” rise.
“Under such circumstances, the six refineries must help instead of taking advantage of the situation,” said the energy minister, adding that, even though crude oil prices are not that expensive, taxpayers are still having to bear the burden of the subsidy provided to the refineries through the Oil Fuel Fund.
Responding to comments by some experts that the GRM should be capped at 3 baht/litre, Akanat said he would agree with the idea under normal circumstances adding, however, that the present circumstances are abnormal and the Energy Policy and Planning Committee will try to work out an appropriate ceiling for the GRM.
Meanwhile, former senator Rosana Tositrakul voiced objection to the government’s plan to seek a 150 billion baht loan, to support the Oil Fuel Fund’s subsidising of local fuel prices, noting that this would increase the burden on taxpayers.
She proposed that the government reforms the oil pricing structure, especially the use of Singapore oil price reference.
She noted that premium costs which are incorporated in the Singapore oil price reference, such as transportation of oil products, loss assessments and insurance coverage from Singapore to Thailand, which, in reality, are non-existent, should be deleted, which would help cut oil prices by about one baht/litre.
She proposed that the GRM should be capped at 2 baht/litre, to put an end to the windfall profits being made by the refineries.
Known as a lone crusader advocating for reform of the oil and fuel pricing structure, Rosana also suggested that the government revokes the Oil Fuel Fund Act B.E. 2562 (2019) and open a market for the sale of standard diesel and benzine under a new price structure, adding that biodiesel should be an optional product for motorists.