The decision by the state Oil Fuel Fund, announced late yesterday, set off a rush by drivers to fill up before the new prices took effect at 5am today, with lengthy queues overnight at service stations nationwide.
The change means diesel prices are up by 18%, with more modest increases for other types of fuels, reports the Bangkok Post.
At PTT petrol stations, the new prices are B38.94 a litre for high-speed diesel, B54.64 for B7premium diesel, B40.68 for gasohol 91 petrol, B41.05 for gasohol 95, B36.05 for gasohol E20, B32.79 for gasohol E85, B52.04 for gasohol 95 premium and B49.64 for gasoline 95.
The government said on yesterday that it was becoming too expensive to subsidise prices pushed up by the Middle East war, and instead will offer targeted assistance for those hardest-hit, such as poor consumers, farmers and truckers.
Finance Minister Ekniti Nitithanprapas said price caps had led to market distortions, hoarding and unnecessary budget losses.
Diesel consumption in Thailand normally averages 65 million litres a day, but since the war began to push up oil prices, consumption has risen to between 85mn and 100mn litres per day.
Hoarding on a large scale - and not just panic buying by individual drivers as the government initially claimed - has been the main cause behind hundreds of service stations running out of fuel despite official assurances that the country’s reserves are adequate.
The Oil Fuel Fund burned through B20 billion in three weeks to keep prices capped. Officials considered borrowing to cover the losses but decided that was unsustainable.
The government has only about B300bn of borrowing headroom left, Standard Chartered economist Tim Leelahaphan told Bloomberg yesterday.
During the 2022 energy crisis sparked by the Russian invasion of Ukraine, Thailand spent B270bn on fuel subsidies and tax cuts, he said.