[EDITORIALS]It’s time to worry about oilCan Korea maintain sustainable development? More and more experts are shaking their heads to this question these days.
Take a look at the oil situation. South Korea is the world’s seventh-largest oil consumer and it imports the fourth-largest amount of crude oil in the world. Last year's energy imports of $66.7 billion (63.2 trillion won) exceeded the combined total of semiconductor and automobile exports, which reached $59.5 billion. When the government planned its economic policies earlier this year, it estimated the average price for oil at $54 per barrel. Prices for Dubai crude oil, however, shot up to $65.79 last weekend.
Having to import oil at $65 a barrel is quite serious. According to a report by the Korea International Trade Association, imports will increase by $9.2 billion while exports decrease by $3.5 billion. This means Korea is likely to see its entire current account surplus from last year ($16.5 billion) wiped out. The worsening trade conditions also mean that the profitability of exports will be meager. All this makes recent comments by the new governor of the Bank or Korea that the gross national income growth rate will increase from 0.5 percent last year to 3 percent unreliable.
Of course, the nation hasn’t been watching with its arms crossed. Compared to the first and second oil shocks, Korea has lowered its reliance on oil for generating electricity from 80 percent to 5 percent by increasing nuclear power. The exchange rate’s drop has also helped against the rising oil prices.
The nation's economy’s move from smokestack industries to information technology and service has also enhanced its ability to absorb the shock effects. This might be a reason the government is maintaining a peaceful look, warning that excessive worrying will not help the situation. It is only examining possible emergency countermeasures or updates on related laws. Everybody from small and medium businesses to conglomerates has moved into emergency mode, except the government.
The nation's people are worried that they will have to undergo an oil shock as well. If the current government even worries about the economy, it is natural for it to be concerned. With oil prices and the exchange rate at the current levels, its effects on the nation’s economic growth are obvious. The general outlook is that oil prices are likely to increase in the future, as there is little reason for them to drop. We plead that the government share the worries about a possible oil shock that its people have.