Economists Urge Thailand To Focus On Energy Efficiency

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SUBSIDIES

Economists urge Kingdom to focus on energy efficiency

By WICHIT CHAITRONG

THE NATION

Despite increasing food and fuel prices that could lead to overheating in some Asian countries, including Thailand, experts suggest the Thai government end subsidies and focus instead on increasing energy efficiency.

At the economic forum "Higher Food and Fuel Prices: What Is the Impact on the Thai Economy and What to Do about It", Frederico Gil Sander, economist at the World Bank's Bangkok office, said oil prices stayed high partly because of speculation. There are some reasons to believe that the prices will not stay high.

Yunyong Thaicharoen, chief strategist at the Bank of Thailand's Office of Corporate Strategy, said subsidies were not conducive to saving energy.

"Price-signals matter," he said, adding that the subsidies were distorting both consumption and production of energy products. He said allowing retail fuel prices to rise would not adversely affect economic growth much.

Price subsidies may delay inflation but only temporarily, and the effect could derail economic growth, he warned.

Kobsak Pootrakool, executive vice president of Bangkok Bank, said food prices next year might not be as high as this year if weather conditions and output improve.

However, he cited a study in the United Kingdom that suggested food prices would remain high over the next 40 years as the world population rises to 9 billion. High demand from emerging economies would put pressure on food prices.

Jeeva Perumalpillai-Essex, another World Bank economist, suggested that increasing energy efficiency was the key for Thailand, given that it depends largely on oil imports.

"Motorists in Bangkok are criminals," she joked, referring to the high consumption of fuel among people living in Greater Bangkok.

The transport sector has vast room to improve energy efficiency. She proposed that the government expand the mass-transit system.

Nipon Poapongsakorn, president of the Thailand Development Research Institute, said that instead of using new excise taxes to curb emission of global-warming gases such as carbon dioxide, the government should use price mechanisms, allowing prices to rise in line with market forces.

The Finance Ministry is expected to submit a new tax structure for automobiles to the Cabinet next week, aiming to reduce carbon emissions, increase safety standards and encourage energy savings.

In its Regional Economic Report released yesterday in Hong Kong, the International Monetary Fund noted that Asia could see a rise in overheating pressures, while inflationary risks were on the upside.

The regional inflation rate accelerated to about 4.5 per cent in February, largely due the rise in fuel and food prices, which are beginning to feed into core inflation and affect the poor. Headline inflation is generally expected to increase further this year before decelerating modestly in 2012.

Regional growth is expected to be close to 7 per cent this year and next, as the region continues to lead the global recovery.

Asian central banks are raising rates to counter inflation. However, this will draw further capital inflows.

-- The Nation 2011-04-29

[trogers]

And most Thais will be jumping with joy to support this? If so, traffic snarls in major towns and cities in Thailand would have been history a long time ago...

[kirk0233]

Thailand produces 380,000 barrels of oil a day and exports 270,000 barrels per day. It has 7 oil refineries. The largest oil refinery and oil company is PTT which is 51% government onwed. Thai Oil Refinery (PTT) alone can refine 220,000 barrels of oil a day. Most recent figures are that Thailand uses 356,000 barrels of oil per day. One barrel of refined oil equals 159 liters of gasoline. If my figures are correct, 110,000 barrels of oil of the 380,000 that are produced domestically are used domestically. The rest is exported. Then at minimum 246,000 barrels are imported daily to meet the usage of 356,000 barrels of oil per day. PTT, the majoity of it state owned, apparently exports the majority of its domestically refined oil. Logically, it is cheaper to keep oil drilled and refined at home rather than export it and then import oil from other countries. Why a government owned company would do this, considering the high oil prices is unknown. It is possible subsidiy may not be necessary if the government majority owned oil production/refinery/gasoline station company (PTT) kept its oil at home.

[givenall]

It always amazes me when I go to a store and the Aircon isrunning full blast and the store door is open.

Also none of the building over here have double glazed glass.And the traffic jam, most of the time is created by the police who control thelight and most often priority is given to the Motorway entrances which most likelygive money to the police in charge.

All and all I am saying Thailand Government is very good in announcementthat make sense and admired but that is the extend of that and no substance totheir ambitions

[gregb]

PTT, the majoity of it state owned, apparently exports the majority of its domestically refined oil. Logically, it is cheaper to keep oil drilled and refined at home rather than export it and then import oil from other countries. Why a government owned company would do this, considering the high oil prices is unknown.

Whether the major shareholder is a private individual or the government doesn't change the logic. I don't see why you feel the need to try and stretch this issue to bash the government. Quite simply, all oil is not created equal. Thailand needs alot of low grade oil for the transport industry. It can export higher quality crudes for use in other industrial processes.

It is strictly a business decision, and one which is practised by every country on the planet in today's globalized world.

As for focusing on energy efficiency, that alone is not enough to fix what ails the industrial economy. Jevon's Paradox ensures that we'd simply wind up worse off than when we started. We need to not only focus on energy efficiency, but simultaneously tax all energy use to make sure the net effect is that the price increases while total consumption drops. That way, energy saved stays saved. The money earned from that can then be invested in infrastructure which further decreases our dependence on oil.

We need to stop consumption and economic growth. When I moved to Thailand 11 years, one of my reasons for doing so was the truly enlightened ideas of the sufficiency economy, which was developed as a response to the Asian financial crisis, but works equally well in the era of energy decline and collapse we are currently facing. Sadly, the politicians have decided to throw this brilliant and genuinely benevolent idea to the wind and embrace populism, which is the quickest way I can think of to destroy this beautiful country.

There are just so many things we have to do beyond energy efficiency that a knee jerk statement like made in this article isn't even helpful. Efficiency alone, without other reforms, will make the situation worse. Better we just keep consuming at an ever expanding rate until it is all gone.

Edited April 29, 2011 by gregb

[Soutpeel]

Thailand produces 380,000 barrels of oil a day and exports 270,000 barrels per day. It has 7 oil refineries. The largest oil refinery and oil company is PTT which is 51% government onwed. Thai Oil Refinery (PTT) alone can refine 220,000 barrels of oil a day. Most recent figures are that Thailand uses 356,000 barrels of oil per day. One barrel of refined oil equals 159 liters of gasoline. If my figures are correct, 110,000 barrels of oil of the 380,000 that are produced domestically are used domestically. The rest is exported. Then at minimum 246,000 barrels are imported daily to meet the usage of 356,000 barrels of oil per day. PTT, the majoity of it state owned, apparently exports the majority of its domestically refined oil. Logically, it is cheaper to keep oil drilled and refined at home rather than export it and then import oil from other countries. Why a government owned company would do this, considering the high oil prices is unknown. It is possible subsidiy may not be necessary if the government majority owned oil production/refinery/gasoline station company (PTT) kept its oil at home.

Locally drilled oil is only in the order of 100, 000 a day maximum.

PTTEP produces gas, not considering condensate production here..only oil, also, and will stand to be corrected, but none of the "pure" Thai oil is refined in Thailand due to the mercury content of the oil, Thai oil is a "heavy crude" and full of mercury and as far as I am aware is refined in Singapore or China.

The "domestic" refined oil which is exported may not be Thailands to start with, it may in fact be refined in Thailand on contract for somebody else...hence the "export"

[painterscabin]

Energy saving, and efficiency starts at home, our houses, at the family leavel. To save , I built my house out of double blocks so less of the suns heat penitrates my interior spaces. Therefore less need for aircon is used to cool when the heat becomes intense. I and my family still use motor bike, eventhough when the rain comes I wish for a car. But start at home, just like keeping thailand clean starts with not throwing garbage on the ground, set some examples and hopefully others will follow suit. Stay cool

[zzaa09]

Imagine what could be done with broad and mandated recycling programs.

[artvarkk]

"Imagine what could be done with broad and mandated recycling programs."

Where I live, the recycling wagon comes at least twice a day. The 'staff' picks through my black plastic garbage bags and throws all the bottles, cans and re-sellable items into the sidecar, re-ties the bag closed and moves on to the next garbage can. I think it's awesome (and slightly sad) that people make a living that way, but it keeps a whole lot of stuff from going to the incinerator!

[painterscabin]

"Imagine what could be done with broad and mandated recycling programs."

Where I live, the recycling wagon comes at least twice a day. The 'staff' picks through my black plastic garbage bags and throws all the bottles, cans and re-sellable items into the sidecar, re-ties the bag closed and moves on to the next garbage can. I think it's awesome (and slightly sad) that people make a living that way, but it keeps a whole lot of stuff from going to the incinerator!

Yes, thai's are great at the recycleing things, better than many in the west. It's the cash incentive, no need for mandatory anything, cash moves trash. Still the changing of habits, like throwing milk container, trash in general on the ground is something that takes personal responcilbity. For me and my family it's a learning thing, my girls have grown up in issan and throwing trash out the window, in the yard has become a habit, but something we try to change, and it's working. It takes time to overcome bad habits. Yes, I know this is far from the beginning subject of oil, but that's where it has gone, like many topics on thai visa.

[asiawatcher]

Rather than waste time on energy, start assessing the major problem of the next decade - food production. Saving energy will not feed the mouths of all, even in this country. If PTT/Govt anted to save on fuel just pass a law to govern vehicles to a top speed of say 110kph and don't sell anything above 4 cylinders or 2.5 litre motors. Sorry - they all have their noses buried in everyone else's business and do not look at the bare essentials. Al this wasted time and money of stupid conferences where stuffy people with no idea try to save the planet! Get a life.