Oil tremorsInternational oil prices have soared above $90 a barrel for the first time in history. A shortage in supply and a weak dollar all point to a further hike in oil prices.
Oil at $100 would be the most expensive ever, even surpassing the price during the second oil shock when inflation is considered. Energy experts see $95 a barrel as the ultimate limit that the world economy can withstand. The whole world has felt a sense of crisis and stock prices around the world have started to fall.
The shock of high oil prices would be especially hard on Korea, which has no domestic oil production. According to the Bank of Korea, for every 10 percent hike in oil prices, consumer prices rise 0.2 percent and the economic growth rate slows by 0.2 percent point. The inflation rate is expected to reach over 3 percent next year, the first time in four years, and many doubt that 5 percent growth can be possible. Worse yet, these are all conservative estimates and no one really knows for sure how big the shock could actually be.
Despite the serious situation, the government seems strangely unconcerned. While we understand the government’s difficulty in finding a solution, we believe it should do more than just repeat its basic statement that we should decrease our oil consumption. The government showed more effort to provide a contingency plan four to five years ago when the oil price hit $30 per barrel than it is doing today. It has opposed the lowering of oil tax on grounds that it would only negatively affect revenues. The deputy prime minister and minister of economy told the National Assembly audit that there was no reason to lower the oil tax. He did not seem to care that the abnormal oil tax system of our country, in which tax makes up 60 percent of the gas price, is seriously harming the welfare of our people.
Even now, the government should review its energy policies and take necessary measures against possible consequences.
Lowering the oil tax to lessen the burden on the people, acquiring a safe supply of resources and developing an alternative energy source are all issues that the government must consider top priority. Consumers should save energy every day while businesses should concentrate on developing more energy-efficient products to survive in these changing times. What is most important is our attitude. While we should not act flabbergasted that oil prices have shot up, we should not ignore the crisis at hand and sit placidly doing nothing.
with the Korea JoongAng Daily
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