[Letter to the editor]Everyone must help deal with oil shock

The world is facing another oil shock, the third since the 1970s. Why is crude oil so expensive and why does it matter to consumers? Oil prices continue to rise everyday. Life will again be difficult, and the public needs to be prepared even as the government devises measures to respond to the shock.

It is important to point out the basic facts about the situation as we prepare strategies for dealing with the problem.

First, oil supply is decreasing. The amount of available oil is not increasing, while consumption is rising rapidly in emerging energy-hungry economies like China and India. According to some news reports, in the first half of 2008, 85 million barrels of oil are available every day, while the demand is 87 million barrels. Naturally, the price of oil must rise, according to the law of supply and demand.

Second, the U.S. dollar continues to weaken due to many problems in the American economy. The weak U.S. dollar helps fuel oil price increases worldwide.

Third, negative news affect the perceptions of consumers worldwide, resulting in panic even when the facts do not support such fears. There is a general feeling of unease due to dire predictions about an oil price shock. These forecasts spread doom and gloom everywhere.

Fourth, oil producing countries face security and political problems. Oil is still available, but production and export are difficult in these countries, especially in the Middle East and Africa. Investment in oil exploration is not encouraged by this situation since investors worry about the damage to production facilities, and on returns on their investment.

How should the public respond? How should the government focus its measures to be effective in dealing with the oil price shock? There should now be greater awareness among the public on how to respond correctly and in harmony with each others’ efforts.

The best way to lower the price of oil is to produce more oil. Many news reports, however, indicate that oil deposits are being exhausted. The Organization of Petroleum Exporting Countries said that they don’t plan to boost production.

All over the world, many responsible governments encourage shifting to fuel-efficient cars and bicycles, as well as reducing oil taxes. Exemptions from oil taxes are, however, not the fundamental solution.

In a period of high oil prices, experts agree that the correct response should be reduction in demand and consumption of energy, together with greater efforts for the development of alternative energy sources. It is an important priority to raise awareness among the population to use more public transport and buy only fuel-efficient cars, among urgent short term measures.

It is important for both the public and the government to agree on and support the country’s energy policy directions and strategies.

Political dialogue is important, but this is a major shortcoming in the current political atmosphere in the country.

In the country’s energy policy, it is important to achieve a balance in the “3Es”: energy security, energy efficiency and environmental protection.

There is need for increasing public awareness and support of industry targets for reduction of carbon emissions, which cause global warming.

The country needs to identify priority policy measures and strategies, both short-term and long-term, to build capability in overseas resource development for alternative sources of energy. There is a need to put in place an energy investment fund, technologies and expertise, as well as to deploy strategic energy diplomacy to ensure stability in the supply of energy and improving the efficiency and quality of refining facilities. Finally, appliance manufacturers need to put out high-efficiency appliances and recall or replace energy-inefficient products.

Kim Hong-rae, student, Hanyang University