Thailand’s latest fuel price increase underscores the limits of the country’s long-used Oil Fuel Fund and highlights the lack of a settled long-term framework for alternative fuels.
The government raised retail fuel prices by 6 baht per litre across most grades from 26 March, with some premium fuels increasing by 8 baht per litre, after saying the Oil Fuel Fund could no longer absorb the subsidy burden created by higher international oil prices. Officials also sought to frame the move against regional benchmarks, arguing that Thai fuel prices still remain below those in several neighbouring Asean markets.
That explains the immediate decision. It does not resolve the structural issue. Thailand has repeatedly used the Oil Fuel Fund to cushion domestic consumers from oil market volatility, while also shaping relative pricing between conventional fuels and biofuel blends. But the fund is a stabilisation tool, not a permanent shield. Its legal framework under the Oil Fuel Fund Act B.E. 2562 (2019) sets financial constraints on how far it can be used to suppress pass-through from global markets. Once those limits are approached, the state is forced back into the same trade-off: higher pump prices, more borrowing, or narrower support.
That is the significance of the latest adjustment. It signals that Thailand’s legacy fuel price management model remains vulnerable when international prices stay elevated for long enough. The fund can smooth volatility at best. It cannot remove it.
That is where the unresolved status of the Alternative Energy Development Plan becomes more consequential. Thailand’s official planning system still points to AEDP 2015 as the last formal plan in force. A draft AEDP 2022-2037 has circulated publicly and includes references to fuels including SAF and hydrogen, but it was issued as a preliminary draft rather than an adopted policy framework. The wider energy planning process has also remained in flux, with the Ministry of Energy stating in 2024 that PDP 2024 was still under consultation.
In practical terms, this leaves the biofuel producers without fully settled long-term guidance on how Thailand intends to scale alternative fuels across transport and industry. In particular, total bioethanol capacity has been underutilized at roughly 60% and continues to decline year-on-year without a nationwide E20 mandate. This has dampened industry enthusiasm for new projects in ethanol, SAF and biochemicals, with no concrete projects apart from the Braskem Siam bio-ethylene in the pipeline. The oil fund is absorbing the pressure, but the transition it was meant to support still lacks direction.
