Govt needs to cut down on fuels offered

Benzene had two grades – regular and super – while diesel had just one grade.

In the past diesel was usually used for large machinery at industrial factories.

Although in those days gasoline engines were modified to use natural gas (LPG), it was popular only among taxi cabs. About 30 years ago CNG was also used in Bangkok by public buses, but it was a small circle and didn’t affect the energy business in the country.

It was in 2007 when oil prices on world markets surged that the then Thaksin Shinawatra government pulled back the government’s subsidy on fuel prices. This led to a sharp rise in the retail price of both benzene and diesel.

The Energy Ministry was also set up for the first time in the Kingdom’s history, and it played a major role in promoting the use of natural gas by modifying gasoline (and diesel) engines so that they could run on either LPG or CNG.

When it was first created, the Energy Ministry gave importance to idea of Thailand being able to depend more on its energy resources. This led to promotion (and later designated by law) of ethanol production from sugar processing and from tapioca. The ethanol would replace the MTBE agent in both 91 and 95 unleaded gasoline. The legal amount of ethanol in the gasohol mixture was 10 per cent (E10).

The same happened to diesel. The government encouraged the use of biodiesel from palm (3 per cent, later raised to 5 per cent) and later made it into law. As a result, all diesel fuel sold in the country has a 5-per-cent mixture of biodiesel.

But due to the lack of planning and coordination between government agencies, there was a sudden shortage of palm oil. The government, through the Energy Ministry, then allowed alternate proportions of biodiesel to be mixed with diesel fuel. So presently, the diesel fuel sold in Thailand is either B3 or B5 depending on the government’s decision. Meanwhile, the consumer has no say whatsoever.

Today, apart from four grades for gasoline – 95 octane, 91 octane, 95 gasohol and 91 gasohol, there are two diesel grades – B3 and B5 – and the government has also introduced gasohol with higher ethanol content (E20, meaning 20 per cent ethanol). On top of this and most recently came E85, which has 85 per cent ethanol content.

You can see that if a fuel station wants to retail all types, it will need space to hold eight fuel tanks (reservoirs). We can see this from the large PTT stations around suburban areas as well as along the provincial highways.

Meanwhile, stations located in the city are smaller and have no capacity to offer all types of fuel as they have so space.

And we haven’t come to stations offering gasoline, diesel and natural gas, which is highly unlikely to happen.

In fact if the government wants to create stability in the country’s energy supply, or if it want to help farmers who grow tapioca, sugarcane and palm, or if it doesn’t want to confuse the public as well as lower the advantage-disadvantage gap between oil retailers, it should scrap many of the fuel types so that every station has a level playing field since they offer the same fuels. This will also increase sales of each fuel that is offered and create eagerness for the station owners, who presently have to bear costs from fuels that generate very little sales.

For example, if the government scraps 91 octane, vehicles that can run on 91 octane can switch over to 95 octane without any technical damage. The second type of fuel that should be scrapped is E20 gasohol, since they can run on alternate fuels such as 91 gasohol, 95 gasohol, 91 octane or 95 octane without any damage as well.

As for diesel fuel, technically there is just one grade of fuel being sold in the stations.

So now we have just five fuel types left – 95 octane, 91 gasohol, 95 gasohol, E85 gasohol and diesel.

I have no idea why the government would want to make all types of fuel available, even though E20 and E85 sales are very low. Fuel stations do not want to offer them due to the low returns on investment.

Perhaps the Energy Ministry is favouring oil companies, although in reality, even if the number of fuels is lower, total sales would not drop a bit.