Published on July 16, 2005

When the Energy Ministry unveiled its energy-saving measures on July 13, it surprised many with one of them.

To get state agencies to use gasohol in their vehicles, the ministry said they would be able to seek reimbursement from the Finance Ministry for their gasohol expenditure but not their petrol bills.

Given that it was wrapped up in the same package of measures that required earlier closing times for petrol stations and billboard-owners to turn their lights off at 10pm, many expected the third measure to be as austere as the first two.

But the ministry admitted that promoting gasohol use by the government would save the country only Bt150 million, while the first two would save about Bt6.7 billion.

Here comes an interesting question: did the ministry confuse the term “gasohol” with “natural gas”? It would have made more sense if the measure had specified natural gas, which is much cheaper than petrol or even gasohol.

Gasohol is only Bt1 cheaper per litre than petrol. It saves only a few baht when you fill your tank, because despite the name, it is still mostly petrol. The only difference is that 10 per cent of gasohol is ethanol and not the petroleum-based product MTBE, which is in regular petrol.

That explains why this measure would save only Bt150 million per year.

This measure was surprising also because of the authorities’ repeated insistence that more Thai motorists should switch to natural gas, which is extracted from the Gulf of Thailand and cheaper than petrol.

Still, motorists, including state agencies that own vehicles, have to spend money to install the equipment in the vehicles to enable them to run on natural gas instead of petrol. The expense could be worthwhile considering that most pundits agree that oil prices should maintain their upward movement, particularly with winter approaching, a season that usually brings more demand for oil to fuel heaters in colder climes.

Or perhaps the Energy Ministry was confused by the plethora of conflicting opinions over the direction of global oil prices.

The International Energy Agency warned on Wednesday that high oil prices were here to stay in this age of uncertainty over tropical storms and geopolitical factors such as the London bombings.

Meanwhile a report by Morgan Stanley, also released on Wednesday, predicted that world oil prices could soon collapse because the market was vastly overestimating the demand for oil in Asia.

Who should we believe? If Morgan Stanley’s suggestion carries more weight, it might be wise to pass on spending tens of thousand baht for the NGV equipment.

Maybe that’s the reason the Energy Ministry did not highlight natural gas in the set of three compulsory measures.

achara_d@nationgroup.com

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