Subsidising domestic oil prices through the state's rapidly dwindling Oil Fuel Fund is not the only way to deal with the fluctuations in global crude prices.
Oil reserves can help Thailand relieve the impact of a surge in global oil prices when the world's oil supply is disrupted by geopolitical conflicts.
Energy Minister Pirapan Salirathavibhaga has put forward an idea to develop a strategic petroleum reserve (SPR) to enhance national oil security, avoiding the negative impacts brought about by crude oil supply problems.
However, his proposal is opposed by energy specialists from the business sector.
The Explainer examines the latest debate, following Mr Pirapan's intention to add the development of an SPR to the new oil plan, scheduled to be enforced from 2024 to 2037.
Q: Does Thailand need to have an SPR?
Mr Pirapan believes Thailand should increase oil reserves by developing an SPR to ensure the country has sufficient oil supplies in the event of unforeseen delivery disruptions by major suppliers.
The SPR is an emergency crude stockpile used to maintain economic activities in the event of a supply disruption. The US, China and Japan consume significant amounts of crude oil and have the largest strategic reserves.
If Thailand has an SPR, it would not need to depend solely on oil imports at the time of an oil supply crisis, which could otherwise lead to oil price fluctuations in the country.
Last year, 53% of total crude oil imports came from the Middle East, with 11% from the US, 10% from Malaysia and Indonesia, and the remaining 26% from other regions, according to the oil plan.
Mr Pirapan wants Thailand to increase its oil reserves, both crude and refined, to cover 90 days of use, up from the current level of 50 days.
Oil stocks for commercial purposes, which are kept by oil companies, can be used for 25 days of the 50-day period while another portion of crude and refined oil stocks, including crude being transported by vessels, will ensure the country has sufficient oil for use for another 25 days.
If the SPR plan is approved, the total oil reserve would increase by 10 billion litres beyond current levels, said a representative from an oil refinery company who requested anonymity.
Concerns over global oil supply disruptions often arise when political tensions between countries escalate into war.
The conflict between Israel and the Hamas militant group, which broke out in October last year, sparked worries over fluctuations in global crude oil prices as war erupted in an oil-rich region.
Authorities have to stay vigilant, looking into the possibility of a surge in crude oil prices because the Middle East accounts for 33% of global oil supply.
Prasert Sinsukprasert, permanent secretary of the Energy Ministry, said earlier authorities only "hope" the worst-case scenario would not happen and urged people to be more aware of saving energy.
He was speaking when the national crude oil reserve stood at 3.91 billion litres in October 2023, with another 1.63 billion litres being transported to the country.
Similar concerns over petroleum supply problems erupted in February 2022, following Russia's full-scale invasion of Ukraine.
Global oil prices skyrocketed to over US$100 a barrel after the invasion, which raised serious worries over the impact on oil and liquefied natural gas (LNG) imports to Thailand.
At that time, the national crude oil reserve was 3.2 billion litres, with another 1.46 billion litres being transported to the country, according to the Energy Ministry.
Thailand had fuel reserves of more than two months, with enough crude oil to last 27 days.
Higher global crude oil and LNG prices were a major problem as it caused the government to spend a huge amount of money from the Oil Fuel Fund to subsidise domestic oil prices. Higher gas prices also drove up electricity bills.
In 2013, the International Energy Agency prompted Thailand to consider developing the SPR, but the proposal was shelved because of a surplus of crude oil in 2014, thanks to massive production of shale oil in the US.
Thailand is preparing to enforce the new oil plan this year, causing Mr Pirapan to instruct the Department of Energy Business to conduct a study on the SPR plan.
Q: Why do energy specialists disagree with the SPR plan?
Executives in the oil refining sector cited financial challenges as a key obstacle to the SPR plan.
It is hardly possible for the government and oil companies to buy a huge amount of oil and invest in oil storage facilities because of budget constraints, said an oil refinery company representative.
If the government wants to develop the SPR, it needs a substantial amount of money, but in fiscal 2025, which starts on Oct 1, a substantial proportion of its budget is already set to be allocated to other projects, including the 10,000-baht digital wallet scheme, he said.
It is difficult to ask oil traders and oil refinery operators to help develop the SPR, said the source.
Many oil refineries have already spent large amounts on upgrading their diesel quality to meet Euro 5 environmental emission standards, which have been in effect since January.
The SPR may not be necessary at present, said Yodphot Wongrukmit, former senior executive vice-president of energy conglomerate Bangchak Corporation Plc.
He does not believe new geopolitical conflicts will lead to the recurrence of oil scarcity as in the past because oil-producing countries which are not members of the Organisation of the Petroleum Exporting Countries (Opec) can help supply crude oil to the market.
Q: How can the government enhance national energy security?
Enhancing Thailand's energy security involves promoting greater use of biofuels, which can reduce the country's dependence on oil imports.
Sugar cane is a raw material for ethanol, which is mixed with gasoline to make gasohol of different formulas, while palm oil-derived methyl ester can be mixed with diesel to make biodiesel.
Blending ethanol with gasoline or mixing methyl ester with diesel can increase national oil security because the raw materials can be sourced in Thailand, without worrying about disruptions in global crude oil supply, said a representative from the sugar cane crushing industry who requested anonymity.
"These raw materials can be converted into potential alternative fuels, which can be a long-term solution to costly oil prices," said Mr Yodphot, adding Thailand will also depend less on oil imports, which account for over 80% of total oil consumption.
He suggested the government focus on the research and development of biofuels, making them cost-efficient and able to compete with refined oil.
The reference prices of ethanol and methyl ester are currently 30-40% higher than the ex-refinery prices of gasoline and diesel, he said.
Ethanol and methyl ester are sold at 30.5 baht a litre and 34.7 baht a litre, respectively, compared with the ex-refinery prices of gasoline and diesel at 23 baht a litre and 24.5 baht a litre, respectively.
