OIL : A Commercial Product.

Abstract

Oil remains THAILAND’S major source of energy. All economic sectors continue to depend on it, particularly in the transportation sector which the consumption is at the highest level around 62.7% Oil from local refineries is accounted for 65.8% and the rest is imported. Most of the crude oil comes form the Middle East countries while the refined product comes mostly from Singapore. As a result of economic expansion during 1983-1991, the need for oil had an average increased of 11.4% annually. For the year 1992, the overall economy was doing well. Overall consumption was around 24,790 million liters, rising 10% from year with a total estimation of 175,000 million baht. Diesel had the highest consumption at 41.7% and followed by fuel oil, gasoline, jet oil and kerosene respectively. The big five oil companies had a total sale of 94.5%. The Petroleum Authority of THAILAND has the highest market share at 36.6% and followed by Shell, Esso, Caltex and Bang Chak. In August 1991, the government introduced a floating oil price system, caursing a change in the market structure and letting the market mechanism directly determine the oil price. The local oil price which is subject to change according to the oil situation in the world market, will reflect the actual production cost and the efficient use of oil. Since the oil dealers are able to free competition, the wholesale-retail oil market is the result of oil dealer being able to set the price freely while wholesale and imported price fluctuate according to the world oil price. Multiple Regression Models were used in the analysis of oil demand in order to find the relationship between the demand, oil prices and other variables. 1.Overall oil demand : The volume of oil used in the country varied according to the Gross Domestic Product (GDP) and was reversed to the average world price. The elasticity of demand was up to 0.4488 and-0.610 respectively. 2. Demand for Diesel : the volume of diesel used was reversed to diesel price and varied according to the number of cars and the Gross Domestic Product in transportation, industrial and agricultural sectors. The elasticity of demand was up to -0.3318, -0.3320 and 0.4583 respectively. 3. Demand for Gasoline : The volume of gasoline was reversed to gasoline price and varies according to the number of cars and the Gross Domestic Product in transportation sector. The elasticity of demand was up to -0.1557, 0.3413 and 0.1257 respectively. 4. Demand for Jet Oil : The volume of oil was reversed to the jet oil price and was varied to the number of flight and the Gross Domestic Product in transportation sector. The elasticity of Demand was up to -0..220, 0.6041 and 0.3741 respectively. 5. Demand for Fuel oil : The volume of Fuel oil was reversed to electricity generation generated by natural gas and was reversed to fuel oil an the Gross Domestic Product in transportation, electricity and industry sectors. The elasticity of demand was up to -0.4134, 1.1435 and 1.3506 respectively.