[VIEWPOINT]We need a new look at energyInternational oil prices have recently been fluctuating repeatedly around the $50 mark, and it seems this will continue for a while. The U.S. Energy Information Administration predicts that oil prices will not fall below $40 per barrel by the end of next year. Of course, the worst-case scenario is that oil prices could rise to around $70 per barrel by next year.
This prediction is based on the fact that if oil prices of the early 1980s were adjusted for inflation, they would be $80 today. This indicates that though it might not be a “third oil shock,” we will have to live with high oil prices in the meantime.
The Korean government formed an economic management plan at the start of this year, with the condition that oil prices in won would be sustained at a standard of $24 for Dubai oil. For this reason, the current trend in oil prices can only have an extremely negative effect on the management and future of our economy.
Solutions are commonly presented when an energy crisis occurs or oil prices rise. In the private sector, companies are trying to work together to promote energy conservation. Several solutions on a national scale are also being discussed. It is obvious that such efforts should be made because the energy problem is essential to address if we want to have continuous growth.
However, the reality is that the only energy solution our country has is the energy conservation campaign that has been repeated over the last few decades. The people of the nation are finding it hard to understand why our only solution to high oil prices is an energy conservation campaign that is designed to control the demand for energy.
Energy-related organizations in Korea were unable to predict the gravity of the upcoming energy crisis even when oil prices were abnormally low a few years ago, unlike other countries.
The fact is that when the Sept. 11, 2001 attacks occurred in the United States and several countries, including highly developed ones, raced all over the world in search of energy sources in anticipation of a future energy supply problem, our country simply sat back and waited for the events in the Middle East to cool down.
An even bigger problem we face is our lackadaisical attitude, which stems from the belief that we can meet the country’s energy demands by continuing to buy oil at market prices, even when prices are high.
People are curious as to whether we even have a long-term energy plan, such as lowering our dependence on Middle Eastern oil and independently developing new sources of energy overseas. People are curious because up until now, the government has not made any clear announcements.
There may be other extenuating circumstances, but the energy crisis, paired with the current economic downturn, could result in threatening even our potential for development. In addition, environmental matters directly related to energy consumption, including Russia’s ratification of the Kyoto Protocol, are being brought into light, increasing concerns about the future.
Broad and responsible solutions need to be presented as soon as possible, such as the creation of a National Energy Committee. In addition, we need to pursue the establishment of other new organizations to carry out general solutions to the current energy crisis.
This would also be a good time to establish major world-class, high-tech companies for the effective development of overseas energy sources. Just because we do not have oil fields doesn’t mean we have to be a minor energy country. Countries such as France, Italy and Germany do not have oil fields within their boundaries but have companies with the technology to lead the oil and oil-related chemistry fields.
In the end, possession of oil fields does not decide whether a country becomes a major energy country or not. It is rather a matter of what energy- related policies the countries choose to implement.
Korea ranks fourth in the world as an oil-importing country. Korea does not have any oil fields, but if we use our buying power, we could create top-class enterprises with oil refinery and related oil chemistry technologies, and we could ultimately become a major energy country.
There can be other solutions to the oil crisis besides addressing only supply and demand. We need to take this opportunity to review our nation’s energy-related fields and draw a new picture.
* The writer is a professor of economics at Hankuk University of Foreign Studies. Translation by the JoongAng Daily staff.
by Kwon Won-soon