BANGKOK – Prime Minister Anutin Charnvirakul, reversing course on Thailand’s fuel policy and removing long-running price caps on diesel and gasoline, may lead to an economic quagmire and trigger a wider price surge.
Removing the cap means fuel prices will now rise with the global market, at a time when oil costs are climbing because of conflict in the Middle East. As a result, many people in Thailand fear higher living costs and a weaker economy.
The move is a sharp break from earlier promises to keep prices under control. It also raises big concerns for households, small businesses, and transport operators across the country, striking fear of more bankruptcies and foreclosures.
Why Anutin Dropped the Fuel Price Caps
At first, Anutin’s government kept a lid on diesel prices to protect the public from rising oil costs around the world. The goal was to stop diesel from going above roughly 33 baht per liter. However, that policy quickly put heavy pressure on the state-run Oil Fuel Fund.
The subsidies reportedly cost about 1 billion baht a day. Because of that, the fund fell deep into deficit in a short time.
The pressure soon became too much to carry. So, on March 26, 2026, the government let fuel prices move freely with the market again. In some places, diesel rose by as much as 6 baht per liter overnight. Drivers then rushed to gas stations, and long lines formed as people tried to fill up before prices climbed even more.
Anutin admitted the change would hurt regular people. Still, he said the government would rely on the Commerce Ministry and other agencies to limit the wider impact. Critics, however, say the shift came too suddenly and left too few protections in place.
The Immediate Effect on Fuel Prices and Daily Costs
Fuel prices jumped as soon as the cap ended. Diesel, which powers trucks, buses, and farm equipment, rose sharply. Some reports put the increase at 18 to 22 percent. Gasoline also moved up fast, with some types rising by 14 percent or more.
That kind of increase doesn’t stay at the pump. It spreads through the economy.
- Transport costs are rising: Truck operators, bus companies, and motorcycle taxi drivers now face much higher fuel bills. Those costs often get passed on to customers.
- Food prices may go up next: Farmers and food shippers depend heavily on diesel. Because of that, vegetables, rice, meat, and other basics could soon cost more.
- Families feel the pressure: Many households already struggle with daily expenses. Now they must spend more on fuel, too.
One driver in Bangkok told reporters he would rather pay more than face fuel shortages caused by hoarding. Even so, many low-income families remain deeply worried about the weeks ahead.
In response, the government rolled out seven emergency measures to soften the blow. These steps include a review of fuel excise tax cuts, a rise in welfare card payments from 300 to 400 baht a month, and targeted support for truck drivers, bus operators, and fishing boats.
How This Will Affect Thailand’s Economy
Many economists warn that removing fuel price caps can trigger a wider price surge. When fuel becomes more expensive, transport and production costs rise too. Businesses then raise prices on goods and services, and inflation spreads.
Thailand imports almost all of its oil, so it has little protection from global energy shocks. Oil prices have gone up because of tensions in the Middle East, and that has pushed the government to its limit.
If officials had kept the caps in place, they could have created even larger budget problems. In some cases, long-term subsidies can also lead to supply issues if sellers pull back.
Several risks stand out:
- Inflation could rise faster: Fuel is tied to the cost of moving goods. If prices stay high, overall inflation could climb more than expected.
- Small businesses may slow down: SMEs make up a large part of Thailand’s economy. Higher costs could cut into profits or force price hikes that hurt sales.
- Tourism could feel the strain: More expensive fuel may push up airfares and local transport prices, and that could make Thailand less appealing to visitors.
- Farmers may face heavier losses: Rural areas depend on diesel for machinery and transport. That can reduce farm income and raise pressure on the food supply.
Still, some analysts say market-based pricing has benefits. It can reduce waste, discourage panic buying, and free up state money for welfare or public projects.
Anutin has said his team is trying to reduce the damage as much as possible. The cabinet has already approved support measures, including fertilizer aid for farmers and tighter price checks on essential goods.
Public Anger and Political Pressure
The timing makes the issue even more sensitive. Anutin, who leads the Bhumjaithai Party, recently won another term as prime minister after his party performed well in the latest election. During the campaign, he stressed the need to ease pressure on household budgets. Because of that, the fuel policy change has opened him to attacks from opposition groups and activists.
Some groups now want the government to scrap fuel excise taxes completely. Others are calling for caps on LPG prices to protect poorer households. At the same time, protests and online criticism show growing frustration. Many people believe the government is choosing budget stability over public relief.
Anutin has tried to calm the situation. He said the move would have “some impact,” but added that all parts of the government are working on solutions. He also pointed to systems already in place to monitor prices and reduce follow-on effects.
Even so, public trust is under pressure. Many people remember earlier fuel crises, when short-term fixes created bigger problems later on. Economists often warn that broad subsidies can distort prices and make future corrections more painful.
What Experts Expect Over the Long Term
Analysts remain split. Some say the decision is painful now, but still necessary. In their view, it helps Thailand avoid a deeper crisis, such as a broken Oil Fuel Fund or fuel rationing. Others worry that higher energy costs will weaken spending, slow business activity, and drag down GDP growth.
Thailand’s heavy reliance on imported oil leaves it exposed to global shocks. That risk grows when the economy depends on tourism and exports. If costs rise across the board, the effects can spread quickly.
The government is also looking at other options, including buying lower-cost crude from different sources. So far, though, few details have been made public.
Finance officials argue that focused aid makes more sense than broad subsidies. In other words, the state can help the people hit hardest, such as welfare recipients, transport workers, and farmers, without draining public funds for everyone else.
No one knows yet how severe the fallout will be. A lot depends on how long global oil prices stay high and how well the government delivers support to those who need it most.
If inflation stays manageable and aid reaches the right groups, Thailand may get through this with only a modest slowdown. But if fuel keeps rising and businesses keep passing costs on, the pressure could hit growth, jobs, and consumer confidence hard.
Anutin now faces a difficult test. He must keep the energy market stable without losing support from voters who backed his party. His business background and past crisis experience may help. Even so, the current global climate leaves little room for mistakes.
For now, people across Thailand are watching fuel prices and grocery bills very closely. The next few months will show whether ending the caps was a hard but necessary correction, or a risky move that puts the economy under greater strain.
The government says it will track the situation every day and make changes if needed. Officials have also asked the public not to panic buy and to use energy more carefully where possible.
In the end, this policy change reflects a familiar trade-off: short-term relief or long-term stability. Thailand’s leaders chose stability. Now they have to prove they can protect ordinary people while the country adjusts.
