BANGKOK (Thomson Financial) - Thailand has started requiring that all its diesel fuel include a component made from palm oil, a move that could reduce costly energy imports but is driving up prices for the commodity, experts say.
From February 1, the kingdom began requiring that diesel vehicles run on a blend that includes 2 percent biodiesel, and is considering raising that to 5 percent within five years.
The switch has sent prices for palm oil soaring, leading to shortages of the commodity that is widely used for domestic cooking and in the food industry.
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Wannaporn Martkasem, chairman of the Palm Oil Refinery Association, said floating palm oil prices would help prevent a shortage in stores, but warned the government would have to find a better way to balance the competing demands for food and fuel. 'Palm oil prices are increasingly affected on the market because of the rising demand for palm oil for biofuel and consumer consumption,' Wannaporn said. Prices for crude palm oil have nearly doubled over the last year, jumping to 35.98 baht per kilo last month, up from 18.63 baht one year earlier. A litre of cooking oil cost 36.32 baht in December 2007, up from 28.05 one year earlier.
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http://www.forbes.com/afxnewslimited/feeds/afx/2008/02/14/afx4659303.html