The higher oil price worldwide is considered worrisome, since it has adverse impacts on all activities, from transportation to services, and from food prices to production costs. The problem is likely to remain for an extended length of time. Everyone must accept the fact that low-cost oil will no longer be available in the future. The question is what people should do in the wake of the expensive oil price situation.

Prime Minister Thaksin Shinawatra stressed the need for Thailand to adjust in many dimensions, as global increases in oil prices were beyond the country?s control. He told the Cabinet that he had read the book The Oil Factor, which claimed that the oil price was likely to be around US0 a barrel in the next 10 years.

The present administration, in its second term, places special emphasis on oil energy, oil trade, energy saving, and the use of alternative energy. Serious steps are being taken in the production of biodiesel and ethanol, with a clear road map on what should be done within a time frame. The Prime Minister said that the promotion of alternative fuels to replace oil was necessary, as rising oil prices would lead to greater inflation.

He was afraid that Thailand would suffer a great deal if it sold agricultural products at low prices and imported oil at high prices. So the situation must be rectified as soon as possible. Citing energy conservation as a major issue, the Prime Minister called on people to help save energy by limiting their driving speed to 90 kilometers an hour and switching off airconditioners when not necessary. People should also switch off lights in rooms that were not in use.

The Cabinet, during its meeting on 8 March 2005, acknowledged a proposal by the Ministry of Energy to make Thailand energy independent. The proposal emphasizes self-reliance for energy and the reduction of the country?s dependence on oil imports. It comprises six measures to cope with the oil crisis.

The first measure seeks to boost the use of natural gas for vehicles, or NGV, the cost of which is half the cost of oil. There are currently 28 NGV stations and the number will rise to 60 by 2005. Vehicles owned by government agencies and state enterprises should be equipped with NGV devices. A reduction in annual car registration taxes may be offered to NGV-fueled vehicles. The Department of Land Transport has been assigned to consider requiring newly registered taxis to use NGV.

The second measure calls for the promotion of gasohol use. There are currently more than 700 gasohol stations nationwide. Public relations campaigns have been stepped up to encourage consumers to be confident in the quality of gasohol.

The third measure involves the promotion of the production and use of biodiesel. The Ministry of Agriculture and Cooperatives is helping develop oil palm cultivation for use to produce bio-diesel on a full-cycle basis. The special purpose vehicle (SPV), a new financial mechanism to support the agricultural business, offers to help manage and expand the biodiesel market.

The fourth measure seeks to encourage people to turn to public transport and mass rapid transit systems. The fifth measure calls for a reduction of empty trips by trucks. If trucks can reduce empty trips by 6 percent within five years, 787 million liters of oil will be saved. The sixth measure involves tax incentives offered to companies and factories, especially small and medium-sized businesses, for their energy-saving measures.

In his weekly radio address on 9 April 2005, Prime Minister Thaksin indicated that the oil price problem was a result of the imbalance of demand and supply. The economy of several countries has become stronger and people have also started to enjoy greater purchasing power. China and India, in particular, have been consuming more energy because of their great populations. People in Africa are also getting richer because their economic development is progressing well. So demand for energy is increasing, and less developed countries, especially oil-importing nations, have to shoulder a heavy burden.

He said that Thailand must strive to create value for all forms of its products. Otherwise, it would face difficulties in selling low-priced products while buying expensive oil.

An intensive campaign for energy conservation has been carried out nationwide in Thailand, with the Government Public Relations Department, the Mass Communication Organization of Thailand, the Ministry of Interior, and the Ministry of Energy as the core agencies to help in public relations.

The Government kicked off the energy-saving drive on 1 June 2005, when Thai people nationwide were called to cut energy consumption seriously.

The campaign calls for turning off at least one light bulb in every house for five minutes at 8:45 p.m. The turning off will enable 14 million households in Thailand to save 130,000 baht in electricity generation costs. If every house turns off one light bulb two hours a day, the country will save 1.2 billion baht in electricity costs a year.

Under the campaign, people are also urged to turn off airconditioners for one hour between noon and 1:00 p.m. every day. Thailand will save 63 million baht a month from not using airconditioners during lunch breaks. Moreover, motorists are urged to limit their driving speed to not more than 90 kilometers an hour. This will enable the country to save 1.5 billion baht in fuel bills a month.

The three-month drive in energy conservation will continue until August 2005 when an assessment will be made. Awards will be given to members of all sectors who serve as good models for saving energy. In this connection, Prime Minister Thaksin Shinawatra has entrusted his three deputies with supervising energy conservation in various sectors of society. For instance, Deputy Prime Minister Wissanu Krea-ngam is responsible for energy saving in the public sector; Deputy Prime Minister Somkid Jatusripitak supervises the reduction in energy consumption in the private and industrial sectors; and Deputy Prime Minister Chaturon Chaisang is in charge of energy saving in the civic sector and among young people.

In his weekly radio address on 25 June 2005, Prime Minister Thaksin stressed that energy saving would enable the country to sell products to other countries at a profit. As for industry, he suggested that old machinery that consumes a lot of electricity should be replaced. He commended the Tesco-Lotus department store for its successful reduction in electricity bills by 25 percent. The reduction has contributed to the country?s energy-saving drive, because a shopping complex was found to consume the same amount of electricity as one district in the rural area.

The Ministry of Commerce has been instructed to prevent profiteering and make sure that commodity prices in the country reflect the real production costs. Energy usually accounts for 10 percent of the production cost. If the price of fuel increases by 10 percent, traders may increase the price of their products by only one percent, not 10 percent.

The Cabinet on 12 July 2005 approved two additional measures for energy saving. The first one was that petrol stations were required to close from 10:00 p.m. to 5:00 a.m., starting from July 15. The second measure was that billboard lights must be turned off after 10:00 p.m. A survey conducted by the National Statistical Office shows that people were willing to cooperate in energy-saving measures.

The Government has offered strong support for all car manufacturers that assemble energy-saving automobiles in Thailand.

Prime Minister Thaksin Shinawatra, in his weekly radio address, stressed the need to offer incentives for the production of oil-saving cars in the country to reduce energy consumption and promote the efficient use of energy. He said that the Cabinet, during its meeting on 17 May 2005, approved three strategies for solving Thailand?s energy problems, as proposed by the Ministry of Energy.

The first strategy calls for the efficient use of energy and the consumption of alternative fuels. The objective is to bring down energy consumption by 13 percent in 2008 and 20 percent in 2009, when the mega-projects on mass rapid transit will be completed. In the transportation sector alone, oil consumption will be cut by 25 percent, or 95 billion baht, by 2009.

A target has been set to increase the use of natural gas for vehicles (NGV) to replace gasoline and diesel by 10 percent by the end of 2008. The number of NGV service stations will be increased from 31 at present to 180 by that time. Gasohol 95 will be used across the country by 1 January 2007, when premium gasoline will no longer be available. The number of gasohol service stations will grow from 730 to 4,000 in 2005. The Government will promote the growing of oil palm, and it has set a target to increase the use of biodiesel by 8.5 million liters annually by 2012.

Another solution to energy problems involves the development of the logistics system, which includes the improvement of the mass rapid transit and goods transport and a reduction in the use of land transport. At the same time, the Government will promote transportation through railway and waterway networks and oil transport through pipelines.

The strategy seeks to cut energy consumption in the industrial sector by 20 percent, worth 74 billion baht, in 2008. A joint public and private committee will be established to boost energy conservation in various industries. As for the public sector, the Government has set a target to cut energy use by 10 to 15 percent. Energy conservation is set as a key performance indicator for all government agencies in the awarding of bonuses. Energy consumption in households will be cut by 10 percent, totaling 15 billion baht.

The second strategy calls for exploring new energy sources in foreign countries, such as Cambodia, China, Laos, Myanmar, and countries in the Middle East and Africa. PTT Public Company, PTT Production and Exploration, and the Electricity Generating Authority of Thailand will join forces as the ?National Champion? in investing in energy production overseas and bringing earnings back to Thailand.

The third strategy seeks to add value to energy resources in the country. Towards this aim, a fund of 800 billion baht will be invested in alternative energy, such as biodiesel and gasohol, and the petrochemical industry.

The Government has campaigned not only for energy saving, but also for the use of alternative sources of fuel. An action plan to help develop and promote biodiesel won Cabinet approval in May 2005.

In response to the plan, the Ministry of Agriculture and Cooperatives will have to complete its zoning for oil palm cultivation within the next six months. The eastern and southern regions will be developed as the bases for oil palm planting, while pilot projects will be launched in the North and the Northeast. The Ministry of Agriculture and Cooperatives will also seek cooperation with neighboring countries to produce oil palm, through contract farming.

The Ministry of Finance was told to establish a special purpose vehicle (SPV) to promote the production of oil palm and other oil crops, as well as biodiesel. The Bank for Agriculture and Agricultural Cooperatives will provide credit for this SPV to operate the oil palm business. The Cabinet also approved a budget of 1.3 billion baht as a revolving fund to produce oil palm. Out of this fund, 800 million baht will be used to promote the growing of oil palm, while the remaining 500 million baht will be spent on research and development and management.

The Ministry of Industry and the Ministry of Energy were instructed to take charge of producing biodiesel and promoting the use of this alternative source. Construction of three biodiesel factories, each with a production capacity of 100,000 liters a day, will begin this year. These factories will be able to sell biodiesel from 2007 onwards.

Ethanol, or grain alcohol, can be mixed with petrol to produce gasohol. The Government also supports the production of ethanol from agricultural produce, such as sugarcane and sugar. There is a possibility that Thailand may become an ethanol production center in this region, as it has abundant raw materials. Various countries, such as Brazil and Australia, have shown their willingness to cooperate with Thailand in ethanol development.

The Government intends to encourage Thai people to turn to use natural gas, since Thailand is able to produce more natural gas than other fuels. PTT Public Company is promoting the use of natural gas for vehicles, known as NGV. It has prepared around four billion baht to help the Bangkok Mass Transit Authority modify engines in their buses for conversion to NGV. Each bus requires 900,000 baht for engine modification. The buses to benefit from the NGV program must run at least 100 kilometers a day. The NGV price is less than half the price of petrol.

Concerned about higher oil prices, many people are turning to pay greater attention to alternative fuels, such as biodiesel and gasohol. Several kinds of oil crops, such as oil palm, have high potential for producing biodiesel. Sabu dam, purging nut, or physic nut, can be developed as a raw material for biodiesel production. This plant is in the same family as natural rubber, but it is not yet known widely among the general public.

The Ministry of Agriculture and Cooperatives and the Ministry of Energy have joined hands with the private sector in conducting research in sabu dam development. Results of the research show that oil extracted from sabu dam could be used to mix with diesel for use in vehicles. The use of sabu dam in producing biodiesel requires low production costs. Sabu dam oil can also be used with farm machinery to reduce energy costs.

The Department of Agricultural Extension and the Office of the National Economic and Social Development Board in 2004 began to launch a project to promote the planting of sabu dam. The project aims to encourage farmers to be aware of the importance of this alternative energy source that can be produced locally. Cooperation with car manufacturers is needed to conduct the testing of the oil crop on a wide scale to create confidence among car users.

Since conventional energy sources, whether they are oil, coal, or natural gas, are limited, there has been much talk about alternative sources of energy, such as gasohol and biodiesel. But even these fuels depend largely on finite resources.

If people look around them for other sources of energy, they will find that the sun provides free, clean, and unlimited energy. As solar cells can be used for electricity generation, the Thai government has moved to develop and promote solar power as an alternative energy source. In fact, solar energy has been used non-commercially in Thailand for centuries in salt production from seawater and sun-drying of paddy rice. Sun-drying has also been widely used for other agricultural and marine products.

The Ministry of Energy has a policy to develop and promote the use of solar radiation for electricity generation in order to reduce peak demand in the power generation system. In the meantime, the Ministry of Science and Technology is giving support for the research and development of solar cell production and related equipment, in response to this policy. The two ministries are working together to support the use of solar cells for electricity generation to help ease the impact of higher oil prices.

Domestic demand for electricity is increasing by about 13 percent a year. It came to more than 19,000 megawatts in 2004. The Electricity Generating Authority of Thailand (EGAT) estimated that the demand would rise more than twofold to over 42,600 megawatts in 2011.

The Government is giving a boost to the solar cell industry. The main objective is to make use of solar radiation to generate power. The effort will not only ease the shortage of electricity, but will also halt the construction of more power plants, which would lead to serious environmental and social impacts, if they were built.

Another objective is to bring down the costs of solar cell systems in the country. Although the cost of producing solar cells is still high, their increased use will stimulate competition in the market. As a result, the production costs will decline, and with lower costs, people are more likely to turn to install solar cell systems, which can substitute for normal sources of electricity used in their homes.

The Ministry of Science and Technology believes that the use of solar cells for electricity generation is most appropriate under the present situation, and that more use of them will make investment in this industry cost-effective.

The Government has established a policy to promote Thailand as a regional energy hub. Prime Minister Thaksin urged the presidents of Unocal and Chevron Corporation, who paid a courtesy call on him on 23 June 2005 to use Thailand as their natural gas production centers for distribution to neighboring countries, saying that tax incentives would be offered for their natural gas production here.

In his weekly radio address on Radio Thailand on 30 April 2005, the Prime Minister said that Oman had agreed to cooperate with Thailand in developing Si Racha in Chon Buri Province as a regional energy hub. Thailand imported oil mainly from the United Arab Emirates, followed by Oman. Japan was Oman?s largest oil importer and Thailand came second. The quality of oil from Oman was suitable for both refinement and consumption in Thailand.

He revealed that PTT Exploration and Production, with the Government as a major shareholder, won a concession to develop Block 44 of the Shames gas field in Oman. In Block 44, the company found natural gas, condensate, and oil, but it must sell them to the Omani government, according an agreement signed in April 2005. The Prime Minister said that earnings from the sales would help offset foreign currency Thailand had spent for oil imports.

He said that Thailand has many experts in petroleum exploration and production, although the country is not an oil producing country. So the Government has set a strategy to promote oil exploration and production overseas. Oman and Thailand agreed to join hands in drilling oil exploration wells in a third country. PTT Exploration and Production would also sign concession agreements with Iran and Bahrain for oil production and sales.

Regarding the strategic plan to turn Si Racha to a regional energy center, the Prime Minister said that Iran and Oman agreed to support the move and that he would encourage the United Arab Emirates to give support as well. The support would help this plan materialize, thus leading to a decrease in domestic oil prices. The reduction was possible, because Thailand would be able to lower its production costs, if it became a regional oil trader.