Household energy consumption and its demand elasticity in Thailand

Abstract

This study concentrates on the analysis of energy consumption, expenditure on oil and LPG use in cars and aims to examine the elasticity effect of various types of oil consumption. By using the Deaton’s analysis framework, the cross-sectional data of Thai households economic survey 2009 were used. By defining energy goods in the scope of automobile fuel, the results reflect the low importance of high-quality automobile fuel on all income level households. Thai households tend to vary the quality rather than the quantity of thermal energy. All income groups have a tendency to switch to lower quality fuel. Middle and high-middle households (Q3 and Q4) are the income groups with the greatest tendency to switch to lower-quality fuel when a surge in the price of oil price occurs. The poorest households (Q1) are normally insensitive to a change of energy expenditure in terms of quality and quantity. This finding illustrates the LPG price subsidy policy favours middle and high-middle income households. The price elasticity of energy quantity demand is negative in all income levels. High to middle income families are the most sensitive to changes in the price of energy.