Special Report – Strong Signal to Eknath: Review Oil Price Adjustment Formula for System Balance
Petrol retailers urge Energy Minister Eknath to reform oil pricing rules, citing destabilizing effects of large advance price announcements that trigger consumer hoarding and supply imbalances affecting stations nationwide with razor-thin p
Volatile oil prices are creating a 'double shock' to both consumers and businesses, as advance announcements of large price swings are destabilizing the entire energy management system. The Petroleum Products Retail Association (PDA) has written to Energy Minister Eknath Prompan and the Fuel Fund Management Board chairman, urging them to urgently review oil pricing guidelines, particularly the practice of announcing large price changes in advance that is significantly disrupting the market.
The letter makes clear that while the oil price adjustment policy aims to reduce living costs, it is directly impacting gas station operators nationwide who are the primary distribution mechanism for energy.
PDA points out that advance announcements of price increases of one baht per liter or more are significantly changing consumer and business behavior. When prices are expected to drop, consumers delay refueling while stations rush to clear inventory to avoid losses. But when price increases are announced, consumers rush to fill up early while operators scramble to order more fuel to meet sudden demand spikes. This opposing behavior creates supply-demand imbalances and pressures the entire system from refineries through transportation to the pump.
With average fuel station margins of only 0.90 baht per liter, operators cannot absorb the shock. Sharp price drops leave those holding expensive stock with immediate losses, while price spikes force costly emergency orders during peak demand.
Price adjustments during holidays and festivals—already high-demand periods—compound the problem, potentially causing localized shortages without supporting measures.
PDA proposes three concrete policy recommendations: (1) limit price adjustments to no more than 0.60 baht per liter per change; (2) use gradual adjustment rather than sudden jumps to reduce speculation; and (3) create compensation mechanisms for necessary large increases. These aim to restore system balance without placing excessive burden on any single party.
