The price of diesel, which has been capped at 30 baht/litre, is likely to increase next Tuesday for the first time in more than two years, as the government meets with oil refineries today to discuss why they decided to increase the cost of oil refining or “Market GRM” (market gross refinery margin) from 2 baht to 6 baht/litre.
The Market GRM is a critical financial and operational performance metric in the oil refining industry that measures the profitability of refining one barrel of crude oil into petroleum products.
In his capacity as head of the Joint Management and Monitoring Centre for the Situation in the Middle East, Transport Minister Phiphat Ratchakitprakarn said that the 30 baht/litre freeze on the price of diesel, in the wake of the war in the Middle East, is due to expire on March 16, after which the price will be allowed to rise, but by how much is yet to be determined.
He claimed that the government has already spent between 3 and 4 billion baht from the Oil Fuel Fund to subsidise the diesel price for 15 days, while the prices of other finished oil products have been allowed to float in line with market mechanisms.
Regarding the crude oil refining cost, which oil refineries plan to increase, he said he would like to hear an explanation from the oil refineries today and will try to persuade them not to pass their financial burden on to consumers, adding that the Oil Fuel Fund will be the first to be affected if the oil refining cost does increase.
Phiphat also said that he cannot estimate the final accumulated loss for the Oil Fuel Fund in its attempt to mitigate the impacts on the consumers through price intervention, because no one knows for sure when the conflict in the Middle East will end.
Nonetheless, he said Prime Minister Anutin Charnvirakul has made it a matter of policy that oil pricing must be fair to all parties concerned, especially for consumers, including the farm and industrial sectors.
The oil refining members of the Federation of Thai Industries (FDI) issued a statement yesterday, explaining that the Market GRM is not the net profit of the oil refiners.
It said that the crude oil refining costs fluctuate in line with market cycles and that Market GRM can fall sharply and, at times, may not cover the operational costs, but the oil refiners are required to maintain operations for energy security reasons and to bear the operational costs to ensure sufficient supply to meet the demand.
