COMMENTARY
BOONSONG KOSITCHOTETHANA
With the potential for crude oil prices to hit $150 a barrel next month and possibly $200 next year, it is imperative that the Samak Sundaravej administration set its priorities right.
Instead of being so preoccupied with playing political games to have the constitution amended solely to end all corruption cases against Thaksin Shinawatra, the government should devote its efforts to tackle much more critical problems - the widespread ill effects of rising oil prices on our economy.
The way the authorities are handling the unprecedented high price of oil, which has gone above $130 a barrel for crude, appears misguided, superficial, uncoordinated, unsustainable and, in many cases, lacking in vision, to say the least.
Some of the energy policy initiatives, like the introduction of E85 gasohol (a blend of 85% ethanol and 15% gasoline) have come about prematurely and not been thoroughly thought-out as to the implications on the automotive industry of the production, distribution and consumption of this alternative fuel.
The E85 was adopted two years ahead of the target date at the whim of ministers of energy and industry, who are rushing to claim public recognition for political gain, while all the crucial elements to make it successful - such as the availability of cars compatible with this fuel and filling stations - have yet to be developed.
Stakeholders like the automotive industry, oil companies and ethanol producers were not consulted beforehand as these politicians and authorities in charge felt they were on top of the subject.
The sudden push for E85 came just months after the promotion of E20, a mixture of 20% ethanol and 80% petrol, was launched. It is still in the early stages of implementation.
While several local car assemblers have made 2008 models E20 compatible, only some 50 E20 filling stations are available in this country, because the oil industry needs time to develop a supply base and distribution infrastructure.
There is much scepticism about whether there will be enough supply of ethanol to produce E85, given the government's unclear policy on the promotion of energy crop plantation and the allocation of farmland for the purpose.
There are also unanswered questions about whether the emphasis on energy crops could be counter-productive for the country's food crop production and thus inflate food prices.
Until recently, the automotive industry was geared towards producing eco-cars, those small cars which consume fewer than five litres of fuel per 100 kilometres and meet Euro 4 standards for carbon emissions of less than 120 grammes per kilometre. The sudden push for E85 is sending a confusing message to local auto assemblers and will only encourage the import of completely built-up vehicles by a few European car makers which currently have E85-compatible production capacity.
Technically speaking, sponsors of eco-car projects may not be able to achieve the required mileage if they tried to make their cars E85 compatible, because of the less energy intensity of the alternative fuel. Encouraging the import of such cars goes against the long-standing state policy of supporting the local automotive industry. Furthermore, the number of imported E85-compatible cars would be few because of their high cost and this would eventually cause the E85 programme to fail. Other easy ways out being resorted to by the Energy Minister - continuing to distort prices through subsidies for liquefied petroleum gas (LPG), compressed natural gas (CNG) and, recently, diesel fuel - do not solve the core problems but are only meant to gain political credit. Politicians should stop giving the public the false view that the gasohol programme and CNG promotion are a panacea for high oil prices, and that they would become cheaply available to them. The public needs to come to terms with high oil prices and ought to be made fully aware that energy, conventional and alternative, must be consumed in a sustainable manner.
State policies related to energy need to be devised and a comprehensive, well-coordinated national agenda with top priority is urgently required to enable us to effectively cope with record oil prices. The Prime Minister himself should take charge of this national agenda and direct the ministries in charge of energy, transport, industry and commerce, which have been mindful of their own issues, to all work harder and sincerely together along with the private sector and expert groups, to get us out of this economic bind.
Boonsong Kositchotethana is Deputy
Assignment Editor (Business), Bangkok Post.
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