Energy policymakers have approved higher subsidies for ethanol-blended E85 and E20 gasohol to encourage motorists to use more biofuel, thereby indirectly supporting farmers.
The subsidy for E20 is now 2.40 baht a litre, up from 1.90 baht, while the E85 subsidy has risen to 9.23 baht from 7.23 baht.
This will help to offset their production costs, which are normally higher than for fossil fuel, especially at this time of collapsing global oil prices.
The wider price gap between E85 and E20 on the one hand and fossil fuel on the other will encourage motorists to use gasohol blends.
Rising demand for ethanol-blended fuels mean greater demand for sugar cane, thereby helping farmers.
The budget for the rising subsidy will come from the state Oil Fund, Energy Minister Anantaporn Kanjanarat said.
He said this month's reference prices had been set at 26.33 baht a litre for ethanol and 25.04 baht a litre for pure biodiesel.
Starting from midnight last night, the higher subsidy has widened the price gap between E20 and gasohol 95 to 2.36 baht a litre from 1.82 baht and between E85 and gasohol 95 to 6.46 baht a litre from 4.46 baht.
Gen Anantaporn said the lower prices of E85 and E20 should boost demand for biofuel.
Demand for E85 has declined to 870,000 litres a day from 1 million a day last year.
However, E20 demand has risen to 4.13 million litres a day from 3 million.
Early next year, E85-compatible vehicles will be granted investment privileges — excise tax will be cut to 25% from 30% to encourage car owners to switch to biofuel-consumption models.
The Energy Policy Administration Committee has also kept retail liquefied petroleum gas unchanged by cutting the levy collection to 8.27 satang a kilogramme from 92 satang.
This will help to offset the global price of liquefied petroleum gas, which has risen to US$362 a tonne from $327.
Meanwhile, Gen Anantaporn said examination of and negotiations for a controversial licence granted to Gulf Electric Plc in 2013 to develop a gas-fired power plant would be finished by year-end.
Gulf won the licence bidding under the independent power producer programme in 2013.
However rivals Grow Energy Plc, Ratchaburi Electricity Generating Holding Plc and Electricity Generating Plc expressed a huge amount of scepticism.
Gulf won the total capacity of 5,000 megawatts, while the rivals received nothing.
"The talks have been good, but I'm afraid they are secret," Gen Anataporn added.
Gulf executives were unavailable for comment.