Examining the Correlation between Biofuel Production and Food Prices in Thailand: a Bivariate Wavelet Coherence Analysis Approach

Abstract

Due to inadequate domestic crude oil production, Thailand must import crude oil from other countries. Following the Alternative Energy Development Plan (AEDP), Thailand has incorporated biofuels as a blending component in fuel production to mitigate oil price fluctuations. The primary feedstocks used are food crops, which raises concerns about the potential impact on food prices due to biofuel production. Therefore, this research study examines the correlation between biofuel production and food prices in Thailand during the monthly period from March 2017 to December 2022, using wavelet analysis to identify high and low-frequency movements, representing short-term, medium-term, and long-term effects. The findings indicate empirical evidence for a significant correlation between biofuel production and food prices in the short term. These outcomes benefit energy policymakers in designing appropriate policies and offer valuable insights for shaping sustainable energy in Thailand's future.