Looking back at six eras of oil price crises, amid shocks from the Iran war pushing energy prices higher, Thailand confronts the same challenge once again.
Oil and energy price crises are not new to Thailand; these problems have occurred repeatedly in the past. Today, Thailand faces renewed pressure from the impact of the Iran war and the closure of the Strait of Hormuz, with global oil prices rising from 198 US dollars per barrel at the start of the week to 242 US dollars per barrel on 23 Mar 2024 GMT+7. Recently, Thailand raised domestic oil prices by 6 baht per liter, causing widespread effects.
Looking back, Thailand has experienced multiple oil price crises, almost all sharing key common factors: geopolitical conflicts, changes in the global economic system, and Thailand's energy dependence on imports.
The first oil crisis began in 1973 during the government of Field Marshal Thanom Kittikachorn, triggered by oil-exporting countries reducing production capacity, causing global crude oil prices to soar about fourfold.
At that time, the global economy was expanding, increasing fuel oil demand. Meanwhile, conflicts between Arab countries and Israel tightened energy supply further. Additionally, in 1971, under President Richard Nixon, the US abandoned the fixed exchange rate system, allowing currencies to float, prompting many industrial countries to follow suit. Thailand adjusted by devaluing the baht.
The result was intensifying economic pressure, with inflation soaring to about 24% by late 1974. Domestic oil prices rose rapidly; between 1973-1974, gasoline increased from 2.30 baht to 3.62 baht per liter, a 57% rise, while diesel jumped from 1.05 baht to 2.33 baht per liter, a 122% increase.
The government issued the 1973 Act to Amend and Prevent Fuel Shortages, granting the prime minister authority to control oil use. However, most measures relied on cooperation rather than strict enforcement, limiting their effectiveness.
During General Kriangsak Chomanand's era, the second global oil price crisis occurred when OPEC announced four consecutive crude oil price hikes. In Thailand, the impact extended beyond oil prices to electricity costs, commodity prices, and overall living expenses. At times, electricity shortages occurred, inspiring songs about the oil crisis.
Economic pressures from rising energy costs accumulated into political pressure, ultimately contributing to the government's fall in 1980.
In 1990, under General Chatichai Choonhavan, the Gulf War broke out, causing global oil prices to surge rapidly from 18.9 to 31 US dollars per barrel within months.
Thailand felt the impact immediately, with gasoline prices rising from 8.45 to 11.05 baht per liter (about 31%), and diesel from 6.10 to 8.40 baht per liter (about 38%).
This event highlighted Thailand's critical vulnerability as an oil-importing country, unable to avoid effects from global market volatility and international conflicts.
From 2003 onward, global oil prices rose continuously, peaking at a record 147 US dollars per barrel in 2008. Key factors included steadily increasing oil demand before the global financial crisis, while production capacity could not keep up.
Speculative funds and hedge funds also accelerated energy price rises, driving Thailand's diesel price to 44.24 baht per liter and gasoline to 42.89 baht per liter before prices dropped sharply later that year.
In the late Yingluck Shinawatra government, domestic oil prices rose sharply, with gasoline reaching 49.15 baht per liter and diesel about 29.99 baht per liter. Although global crude oil hovered around 110 US dollars per barrel, domestic factors like tax structure, oil fund collections, the removal of Gasohol 91, and a weakening baht played significant roles, pushing prices to historic highs.
During General Prayut Chan-o-cha's government, the Russia-Ukraine war erupted, and US sanctions restricted exports and trade with Russia, causing global energy prices to rise continuously.
This shock reached Thailand, pushing gasoline prices above 49 baht per liter while diesel prices were held at 29.94 baht per liter.
Examining each oil price crisis period reveals that while causes vary—from wars and political conflicts to market mechanisms and speculation—Thailand's persistent vulnerability as an energy-importing country remains unchanged. The repeated impacts manifest as rising energy prices, inflation, higher living costs, and escalating economic pressures that spill into politics.
This oil price crisis thus poses a crucial question: can Thailand break free from this recurring cycle of crises?