When he was Prime Minister, Thaksin decided to heavily subsidize the gasoline market.
The idea was to offer a “cushion” to the thai voters/drivers, as soon as 2004, when the price of oil started to surge on the world market . It continued in 2005, for an obvious -political- reason : the general elections…
That was part of the Thaksinomics.
This policy leaded to a debt of 100 billions THB (State Oil Fund). But the thai drivers were happy… Now they have to pay back. There is a premium on every liter at the pump, to payback the fund.
This shows the weakness of the Kingdom related to energy and especially gasoline.
Any further hike of oil prices on the world market could lead to a recession. Thais thought, for too long, that gasoline was granted. The party is over.
Right now a liter cost 29 to 30 THB. 2 years ago it was less than 20 THB.
The point to understand is on the chart 2. An individual in a european country pays already much more for his gasoline (because of heavy taxes). But he can cope with further hikes, in regard of his income.
On the contrary, thais are… naked. Any further hike would be a full blow, related to the average income. Meanwhile, the thai authorities would have no means to subsidize gasoline.
Therefore, the situation is much more dangerous for Thais than for Europeans.
It’s just a matter of time before we will see the streets and the highways of Bangkok… cleared of traffic ! Mad Max Scenarii ? Yes. But a likely one.
Prices of gasoline as percentage of daily GDP
Cost of a short gallon of gasoline as percentage of daily GDP. Click to enlarge.
Some other graphics (from Bangkok Post, Energy : Reform in the pipeline)
The oil dependance
Price structure comparison and Prices since 2003 (in THB)