Generally, demand of energy in transport sector depends on two major socio-economic factors; income and prices.
Income, both in absolute and in per capita terms, and fuel prices is the most important determinant of demand for transportation fuels.
In general, transport demand rises with income and decrease when fuel price increase .
In this model, the dependent variable is transport fuel consumption of each transport model by fuel type, Ft,m,f, which presented in unit of kilo ton of crude oil equivalent (ktoe).
Two basic parameters, per capita gross domestic product (per capita GDP), Gt, and crude oil price, are used as independent driving variables for the fuel consumption in the models.
In addition, dummy variable is used to indicate the occurrence of economic crisis, the ‘‘Tom Yam Kung crisis’’, during 1997–1999.
This variable is ‘‘1’’ in the crisis years and ‘‘0’’ in the others years.
The models can be shown in the following equation: