Energy cost crisis mounts

Tax cuts on two selected fuels have failed to address the energy-cost crisis, as protests loom and pressure mounts on the government.

The cabinet approved three-month excise cuts of 5.60 baht per litre for E20 gasohol and 5.50 baht for B20 biodiesel, effective Oct 28 to Jan 27. Prime Minister Anutin Charnvirakul said the measure would lower fuel costs and support farmers by stimulating demand for biofuel crops.

But E20 and B20 are not the preferred fuels of many motorists and transport operators, raising questions about whether the discounts can provide meaningful relief.

Limited reach

Narumon Mekborisut, deputy director of the Foundation for Consumers, said many motorists avoided E20 and B20 because of concerns about engine performance. She questioned the policy's timing as households and businesses faced higher energy costs.

She called for a review of the fuel price structure and removal of hidden costs. Cheaper fuel alone would not resolve the cost-of-living problem, she said, urging affordable public transport and controls on food prices and essential goods.

The Land Transport Federation of Thailand raised similar objections. Its members protested at the Ministry of Energy on Wednesday, saying the cuts offered little relief to lorry operators because B20 was not their main fuel. The federation also demanded transparent oil pricing and measures to address operating costs.

Switching fuels

Ministry of Energy figures show daily B7 diesel consumption at 52 million litres, compared with six million litres for B20. Gasohol 91 and 95 together account for 23 million litres a day, while E20 consumption is six million litres.

B20 sales rose from six million litres a day to nine million on Oct 28 and 29, before reaching 10 million on Oct 30. The price reduction made B20 nearly 10 baht per litre cheaper than B7.

The increase suggests lower prices can encourage fuel switching. However, B20 consumption remains far below B7, while E20 use is lower than Gasohol 91 and 95 combined. The figures do not establish whether the shift will last or whether the tax cut alone caused the rise.

Mounting pressure

The Oil Fuel Fund had a net deficit of 107.203 billion baht as of Nov 1, worsening by 1.751 billion baht from the previous week. The shortfall comprised 65.344 billion baht in the oil account and 41.859 billion baht in the liquefied petroleum gas account, according to the Oil Fuel Fund Office.

The deficit highlights the strain of maintaining fuel-price support. It cannot be attributed solely to the latest tax reductions, but raises questions about the sustainability of subsidies without changes to the fuel price structure.

Three groups plan to rally at Government House on Monday, demanding a 10-baht-per-litre reduction in fuel prices, especially on B7, which is priced at 41.79 baht per litre today.

The convoy is led by Mano Khrueakaew, a village headman from Krabi Noi in Krabi province and head of the People's Revolutionary Alliance for the Protection of the Land.

Travelling from Nakhon Si Thammarat, the group aims to bring 1,000 vehicles to the capital and has received more than 1.6 million baht in donations so far. Its scale could turn fuel-price discontent into a broader political challenge.

Farmers left waiting

Montri Na Nakorn, manager of the Krabi Oil Palm Farmers Cooperatives Federation, said the tax reduction had not led to a meaningful increase in palm oil prices or purchase volumes. He believed refineries would receive the most direct benefits from higher biodiesel demand, while small-scale farmers would gain only indirectly.

"Refineries sit between biodiesel demand and the prices farmers receive for raw palm fruit, and higher demand does not necessarily benefit growers," he said. Palm prices also depend on global crude oil prices and market demand.

Mr Montri urged the government to support a long-awaited palm oil bill to improve plantation standards, strengthen small-scale farmers and promote sustainable production.

The proposed legislation follows Roundtable on Sustainable Palm Oil principles, including responsible plantation practices, avoiding forest conversion and social responsibility. Compliance could help farmers secure a premium of 0.50 to 0.75 baht per kilogramme, he said.

The federation represents more than 100,000 farming families in Krabi, Surat Thani, Trang, Phangnga and Nakhon Si Thammarat. It bought 245,000 tonnes of palm fruit from members last year, worth 1.7 billion baht.

The average price has reached seven baht per kilogramme this year, up from three baht last year, partly because of lower yields caused by El Niño and strong demand.

The cuts expose a mismatch between the government's intervention and the problems facing fuel users and producers. B20 sales have risen, but B7 remains dominant and palm farmers have yet to see a corresponding benefit.

With protests approaching and the fund deficit exceeding 107 billion baht, the government faces pressure to address wider energy costs.