THE SUDDEN increase of oil prices by 6 baht a litre in the middle of the night will not significantly solve the problem of smuggling fuel to neighbouring countries because the price difference is still very high with a gradual or tiered increase based on world market being a more appropriate measure, People’s MP Anusorn Tamajai said today (March 29).
This will only stop when domestic oil prices plus transportation costs equals or exceeds the price in neighbouring countries with spatial arbitrage continuing to occur if the former stays significantly lower than latter or the global market.
“A sudden 6 baht increase in oil prices will not help much because opportunities for spatial arbitrage will persist,” Anusorn, former chairman of the Audit Committee and director of Bangchak Petroleum Plc, said.
Weak policy responses will lead to economic stagnation and potential shortages in the second quarter.
Shortages would likely include petroleum-related products, plastic pellets, packaging plastics, fertilisers, construction materials, pharmaceuticals, chemicals, and paints, among others.
A stagnant economic recession with very high inflation will occur in Thailand and many Asian countries. Whether the situation will be as severe and prolonged as in the 1970s remains to be seen, depending on how far the US and Iran will expand their war.
However, unemployment will be a major issue in the coming period, because the human labour market will be further exacerbated by artificial intelligence technology replacing humans in almost every business and industry.
Research shows that AI technology will be able to save human labour working time by at least 60-70 percent.
Generative AI (creative artificial intelligence) and Artificial General Intelligence (AGI) or General AI will replace highly skilled, high-wage, and highly knowledgeable human labour, more so than low-skilled and low-wage labour.
It is predicted that half, or approximately 50 percent, of all jobs in the labour market will be replaced by automation by 2045.
Generative AI, integrated with production technology, will boost labour productivity growth by 0.5-3.4 percent annually.
The People’s MP further said that the Commerce Ministry’s cost-of-living reduction measures, such as the “Blue Flag” low-price stores providing cheap goods or raw materials for sale, will be ineffective and will only alleviate the problem of high living costs and inflation temporarily in some areas.
For example, providing cheap raw materials to 24 small rice and curry shops or restaurants under the “Thai Helps Thai” policy, cannot pressure market prices downwards. It will only be useful for building image and advertising to show the public that the problem is being solved, but it does not truly do so at a systemic level. It creates hidden costs and transportation expenses, he explained.
“It’s using taxpayer money to temporarily subsidise some shops, distorting the price mechanism. It may raise questions about the criteria used to select the 24 shops.
“Measures to address the cost of living crisis and inflation stemming from energy costs must tackle the root causes of the problem,” Anusorn said.
Moreover Thailand’s energy system is centralised in strategy and planning, decision-making, and implementation, including reliance on large-scale energy production sources.
Now, with technological advancements, a decentralised energy system can be implemented.This would distribute responsibility for the country’s energy system to various groups thus enabling energy production and management to better respond to energy crises with less environmental impact.
“We need to become more self-reliant in energy, especially from renewable energy sources like solar power.
“We still invest and utilise very little renewable energy compared to the country’s potential,” he said.
Policies to promote decentralised energy production should focus on reducing market barriers to centralised energy systems, including investment, pricing structures, and supporting infrastructure. This would ensure that it is financially and economically viable, and can meet the country’s energy needs.
CAPTIONS:
Top – Barrels of crude oil. Photo – Atik Sulianami on Unsplash
Insert – People’s MP Anusorn Tamajai. Photo – Naewna
Front Page – A car being filled at a petrol pump. Photo – Sanook.com
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