Bangkok: The energy sector has mandated daily reports on oil stockpiles to strictly control hoarding and smuggling following a 20% surge in demand.
According to Thai News Agency, the Permanent Secretary of the Ministry of Energy, Mr. Prasert Sinsukprasert, highlighted the challenges arising from the more than 20% increase in oil demand, which has disrupted the system. This surge has prompted jobbers to purchase fuel directly from gas stations. To address these issues, the Permanent Secretary has called for easing reserve requirements while maintaining existing quotas and has instituted daily reports on oil stocks at 6:00 PM to prevent oil spills and smuggling amidst rising global costs.
Mr. Sinsukprasert revealed that the Ministry of Energy is urgently tackling the tight oil supply and fluctuating prices by enforcing strict measures to prevent hoarding and illegal sales. Refineries, depots, and oil traders have been instructed to submit daily receipt and disbursement data to prevent oil leakage and have urged the Department of Special Investigation (DSI) and other relevant agencies to monitor and investigate any irregularities closely.
The primary cause of the tight oil supply is a rapid increase in domestic demand, driven by individuals and businesses rushing to stockpile oil. This has disrupted the distribution system, particularly affecting wholesalers or "jobbers" who are unable to purchase oil at regular prices and are compelled to buy from gas stations. Consequently, many gas stations have depleted their fuel supplies faster than usual, reducing sales from a full day to half a day, leading to long queues.
To address the immediate issue, the Ministry of Energy has relaxed legal oil reserve requirements, allowing traders to temporarily draw on reserves to increase liquidity in the system. This measure is contingent upon replenishing reserves to meet quota criteria later, along with reorganizing oil distribution. The ministry assures all traders that they will receive the same minimum oil quotas as before, preventing unfair practices or discrimination.
In terms of regulation, the Ministry of Energy requires that oil traders under Sections 7 and 10, as well as refineries and oil depots, report daily data on oil receipts, production, sales, and remaining stock to the Department of Energy Business at 6:00 PM. A digital platform is being developed to centralize data collection and ensure traceability throughout the system. Legal action will be taken immediately against anyone found reporting false information or engaging in hoarding.
Efforts are also being intensified to close loopholes in oil smuggling out of the country, as the significant price difference of diesel between Thailand and neighboring countries incentivizes such activities. This has led to integrated cooperation with the police, customs, and security agencies to conduct rigorous inspections along the border.
Regarding the oil price situation, the government continues to use the Fuel Fund mechanism to stabilize diesel prices to reduce living costs, even though the fund is currently in deficit by more than 28 billion baht and faces borrowing limitations. The government affirms it will strive to manage prices to minimize public impact.
The Permanent Secretary also clarified the issue of refining margins, explaining they do not represent the net profit of the refinery but merely the difference between the price of crude oil and refined products. Actual costs have increased significantly due to higher crude oil premiums, transportation, and insurance costs that have risen due to the conflict in the Middle East, and the increased cost of chemicals in refining due to rising global market conditions.
Considering a windfall tax on refineries, careful consideration is needed, as the energy industry is highly volatile. If the tax is imposed during a profitable period, measures may also be necessary to mitigate future losses from inventory held by operators.