Fun (?) Funds: how funds in Thailand impact your daily gas price

There are a good number of government funds in Thailand scattered across various industries. Most of them are created with a purpose to function as a lever for the Government to intervene in the matters that are normally considered to be within the private sector domain. Thailand's Oil & Gas industry is not an exception.

Today, this article will cover the 2 funds that impact how much you pay your gas tank each time you refill your vehicle. These two funds are

1. The Oil Fund

2. The Energy Conservation Fund

The two funds were created from a different reason but still share the same broader goal, which is to allow the Government to regulate the pump price in domestic market

Figure.1 Example of Oil Price Structure in Thailand with funds in blue columns

First, let begin with the Oil Fund, this is fund was established under Section 5 of the Oil Fund Act B.E. 2562, and has the objective of maintaining stability of domestic oil prices at an appropriate level in the event of an oil crisis. This means that the Oil fund can either demand a remittance from the seller (gas station) or, on the other way around, provide a subsidy back to the seller, which depends on the market condition.

The second fund is the Energy Conservation Fund which was established under Section 24 of the Energy Conservation Promotion Act B.E. 2535. This fund collects a steadier level of money off the pump price, with its objective is to be used as a working capital for the Government to help or support operations related to Country's energy conservation.

Overall, the Oil Fund is a rather more active fund with its amount depending on the market condition. Still, the bottom line that it should be emphasized here is that both of the components from these funds are costs that the gas stations across the country pass it on to the motorists one hundred percent. In other word, we are the one paying directly to the government funds!

In the next blog, we will cover the largest piece in this pump price puzzle. The ex-refinery price!