Oil shock, paradigm change

Optimists say that if global venture capital investment disappears, oil prices will be stable. Such optimism has already vanished, however.

Oil prices have exceeded $130 per barrel, with a prevailing negative view that it will soon pass the $150 mark in the near future. There is a strong possibility that high oil prices will be structurally embedded.

Korea is the world’s fourth greatest oil importer and the consumption of oil per person is relatively high.

Right now the tide seems to be running against Korea because of the rapid increase in the price of crude oil. There are no appropriate alternatives to the current oil crisis. The Korean oil market has entered a “super-spike” period, with oil prices increasing at an unprecedented speed. A considerable amount of time and money is needed for facility investment designed for energy reduction.

We have no choice but to place a great deal of weight on nuclear power generation, and wait for the next change. Currently, mining rent per barrel costs $27 to $30 worldwide. The Korea National Oil Corporation warned that if oil prices exceed $80 per barrel based on the price of Dubai oil, it is a bubble.

If the global oil market strikes the balance between demand and supply, experts say, international oil prices will decline heavily. Fortunately, the U.S. is decreasing its oil consumption and also may allow exploitation and development drilling in Alaska.

With oil prices skyrocketing in China and India, the global community should join efforts to stop the rapid increase of petroleum demand.

We need to take a closer look at paradigm change in the global economy caused by the oil shock. Former Saudi oil minister Ahmed Zaki Yamani warned, “The stone age came to an end not because of lack of stones.” He emphasized that skyrocketing oil prices would make oil exporters the prisoner of their own deeds. With the appearance of convenient alternative energies at reasonable prices, the oil period may be ending.

This oil shock may serve as a trigger to encourage developed countries to engage in alternative energy development projects. Bioethanol and diesel have already achieved brilliant results, leaving only a few technological defects.

It is inevitable to develop alternative energy resources for the purpose of enhancing sustainable development and stopping global warming. Unless Korea is well prepared for the post-oil age, it may fall behind the world economic trend.