However, the ability of households and businesses to adjust to higher oil prices has improved economic stability, trade and current accounts, the central bank's report said.

But both government and private sectors need to do more to increase efficiency of oil consumption.

"Efficiency should be boosted, especially in the transportation sector. The government should also urge people to switch to using alternative fuels," said the report.

It said oil-usage efficiency could play an important role for the country's economy as global oil prices rise, because Thailand is sensitive to supply disruptions of the world's key energy resource.

Thailand has relied on imported oil at a high level compared with other countries, reflecting an inefficient oil-consumption structure.

In 2001, Thailand's oil intensity index, based on daily oil consumption per barrel compared with GDP, was recorded at 6.1. This was higher than most other countries, except Singapore, which had an oil intensity index of 7.3.

Japan and the UK's oil intensity was only at 1.1 each, followed by Germany at 1.3 and France at 1.4. India and China each, which are currently fuelling the latest oil-consumption binge to serve their huge growth, got a mark of 4.4.

The BOT forecasted that Dubai oil prices for the base-case scenario would average US$61.5 (Bt2,304) per barrel this year and could reach $69.3 a barrel in the worst-case scenario.

Thais have reacted to the high oil prices by reducing consumption or shifting to alternative fuels, such as gasohol, in the past two years.

Earlier, the government subsidised the prices of petrol and diesel, but ended the subsidy for petrol in October 2004 and then phased out support for diesel in July 2005.

After diesel subsidies ended, diesel usage contracted 9.3 per cent, compared with a 9.8-per-cent hike in the first half of the year.

It declined by 8.4 per cent in the first two months of this year, according to the BOT.

Petrol usage contracted 5.4 per cent last year from 2004 and registered a 6.3-per-cent decline in the first two months of this year.

All energy consumption declined 0.1 per cent in the first two months of the year, compared with a 0.3-per-cent rise last year.

In addition, the import value of oil increased 7 per cent in March, despite a 26-per-cent contraction in quantity. The increase was due to a 33-per-cent increase in price from March 2005.

The trade balance in March also swung back to a surplus of $187 million for the first time in six months, resulting in a trade deficit of $224 million in the first quarter of the year.

Also, the report said that the Oil Fund's subsidy on liquified petroleum gas (LPG) at Bt2-Bt3 per kilogram has resulted in a sharp rise in LPG consumption.

"Some drivers have shifted to gas instead from petrol or diesel. LPG consumption by vehicles last year increased by 35.7 per cent," said the report.

Overall LPG consumption rose 9.9 per cent in the first two months of the year, faster than the 8.3-per-cent growth between 2004 and 2005.

Anoma Srisukkasem

The Nation