Author: Montchai Pinitjitsamut
Abstract: This study emphasizes the analysis of energy consumption expenditures on oil and liquid petroleum gas (LPG) used in cars in order to examine the elasticity effect of various types of oil consumption. Using Deaton’s analysis framework, the cross-sectional data from a 2009 economic survey of Thai households were used. Defining energy goods according to automobile fuel, the results reflect the lesser importance of high quality automobile fuel in households of all income levels. Thai households tend to vary their consumed quality rather than fuel quantity in terms of thermal energy. In addition, all income groups have a tendency to switch to lower quality fuel. Middle and high-middle households (Q3 and Q4) have the highest tendency to switch to lower quality fuel during a surge in oil prices. The poorest households (Q1) are normally insensitive to a change in energy expenditures based on quality and quantity. This finding demonstrates the benefit of the LPG price subsidy policy on middle and high-middle income households. The price elasticity of energy quantity demand is negative in households of all income levels. Middle to high income families are the most sensitive to energy price changes. The nearly to 1.0 elasticity illustrates that the actual change in consumed volume in terms of thermal energy among middle to high income households (Q3, Q4 and Q5) occurs not only in quantity, but also in quality.
Keywords: energy consumption, demand elasticity, energy expenditure