Navigating Pricing Structure Transitioned from Euro 4 to Euro 5 in Developing Countries: A Case Study of Thailand

Abstract

This study aimed to investigate the pricing structure of Thai oil refineries as they transitioned from Euro 4 to Euro 5 fuel standards, mainly focusing on compliance with regulatory requirements. The objectives comprised examining reference fuel types for pricing based on market conditions, evaluating quality adjustment costs to align with Euro 5 standards, analyzing additional premium costs within the pricing structure, and acknowledging the environmental benefits of transitioning to Euro 5. The rationale of this study generated a comprehensive framework to understand the economic implications of transitioning to Euro 5 standards and guide policymakers while supporting environmentally responsible practices. To achieve these objectives, qualitative research methods were employed, which consisted of surveys, interviews, and focus group consultations with important stakeholders in the oil refining industry, such as refinery operators and government agencies. Data were gathered to evaluate present pricing mechanisms and identify key cost components, including premiums for freight, insurance, and losses. The results indicated that Thai refineries faced substantial operational challenges, emphasized by increased costs associated with upgrading facilities, rising energy expenses, and escalating prices for catalysts and feedstock materials. The study found that recalibrating the pricing structure in line with real market conditions was essential for increasing regional competitiveness. Finally, the findings highlighted the significance of adapting fuel pricing policies to support the transition to Euro 5 standards successfully, ensuring a sustainable energy future and environmental improvement while nurturing economic growth for Thailand.