KUALA LUMPUR, Oct 18 (Bernama) -- Prime Minister Datuk Seri Abdullah AhmadBadawi Monday said that the government would look into ways to lessen thecountry's dependence on crude oil and this includes increasing the use ofnatural gas vehicles in public transportation, encouraging the developmentof renewable energy, using palm oil as biofuel and increasing energyefficiency.

Against a backdrop of skyrocketing crude oil prices which broke throughthe US$50 per barrel mark last week which would have raised Malaysia'ssubsidies for petroleum products to RM4.2 billion and RM7.3 billion inrevenue foregone this year, Abdullah said research and development wouldbe continued into alternative energy sources.

They include solar energy, wind energy and energy generated from biomass,he said in a statement to announce the outcome of the first meeting of aCabinet committee set up to study the impact of rising petroleum prices onthe economy.

Abdullah also said efforts would be undertaken to encourage more buildingsto use the low energy office concept.

Abdullah chaired Monday's meeting which was also attended by his deputy,Datuk Seri Najib Tun Razak, as well as ministers and senior governmentofficials related to the matter.

The Cabinet had during its weekly meeting on Oct 13 agreed to establish aCabinet Committee to Study the Impact of the Increase in Petroleum ProductPrices on the Economy and look into ways to lessen the dependence onpetroleum products.

Abdullah said Monday's meeting had taken note that the five sen a litreincrease in the prices of petroleum products had a nominal effect on theConsumer Price Index (CPI), which measured the rate of inflation in thecountry.

As such, the Prime Minister reminded traders not to raise prices accordingto their whims and fancies.

He warned that the government would take stern action against traders whotook take advantage of the rise in petroleum prices.

He said the price of crude oil in the world market has been increasingsignificantly since the beginning of the year.

The price hike has forced the government to shoulder a considerably higherpetroleum subsidy.

Abdullah said the government's subsidy pay-out would increase if the priceof crude oil continued to increase.

Oil prices soared over US$55 a barrel on Monday led by record-breakingheating oil prices on fears of a winter supply crunch.

He said the meeting also agreed to take stern action to curb the smugglingof diesel from Malaysia.

Speaking to reporters later, Najib said there were suggestions to use palmoil mixed with fossil fuel for use as fuel in cars.

"These are some of the things which are being seriously studied by thegovernment.. as soon as possible because we cannot afford to pay huge oilsubsidies," he said.

Najib, who had earlier launched a book written by Shahanaaz Habib, ajournalist from The Star -- "Between Blood and Bomb" -- said there werealso questions whether those who received oil subsidies were eligible forthem.

"Because now there are those who have more than two or three more cars andhouses which are rented out receiving subsidies. And so the questionarises whether or not the huge subsidies were applied fairly," he said.

According to Najib, the huge amounts that the government, estimated atabout RM13 billion this year, for oil subsidies could in fact be used tofund important development sectors for the benefit of the rakyat.

Najib said although Malaysia has relatively good economic growth, itsenergy use was not that efficient.

Asked whether the government would increase fuel prices, he said thiswould depend on the world market price.

-- BERNAMA