[Editorial] Nation`s viable petroleum policies

It appears that we are going to have a very cold winter this year.

The gloomy forecast predicts that oil prices may hit as high as 40 dollars per barrel if the cold weather in the Northern hemisphere gets severe spells this winter. This will give rise to a third oil shock since the 1970s making world economy falter from the oil crisis.

Despite the agreement by the OPEC to increase their oil productions by some 800 thousands barrels per day, this did not stop soaring oil prices. The United States` move to release its oil reserves turned fuel prices into a downward trend. This can, however, hardly be a major solution to counter the oil crisis because the U.S. reserves which represent some 50 percent of the world`s total reserves, recorded the lowest level in recent periods.

Besides, the market reactions to the OPEC`s agreement for increased production is still very unsettling. Saudi Arabia among the OPEC nations is the only country that has enough reserves for increased production.

The countries like Japan and Europeans nations whose fuel needs rely mainly on imports, will suffer greatly from the oil shock.

It is certain, however, that the developing countries like Korea and Thailand will suffer most from the crisis than any other nations.

Advanced countries having gone through successive oil crises since the 1970s were able to reduce their oil dependence by developing substitute energy sources and new technologies as well as the ways to increase an energy efficiency. By contrast, the experts analyze that developing countries which concentrated their investments in such energy-intensive industries as steel and shipbuilding, became more vulnerable now to oil shocks-related losses than 20 years ago.

Petroleum prices can easily be stabilized if Saudi Arabia shows its willingness for increased oil production to settle the market instability. It is almost impossible to make exact predictions about international fuel prices and fluctuations. Thus, an emergency senario for energy supplies appears imperative to meet the worst situation for a nation whose energy needs rely 100 percent on oil imports.

Sudden oil prices soaring will bound to slowdown exports and business activities as well as causing inflations. If high oil prices continue to prevail, the economic indices that were set on the basis of the oil prices being 25-26 dollars per barrel, have to be readjusted and revised.

In particular, all economic actors, be they individuals, the government or enterprises, must launch energy saving drives. Our firms occupy some 60 percent of our energy consumption. They must make innovations to replace their energy-intensive installations with energy-efficienct equipments. Whithout making increased investments in energy saving equipments and installations, firms can hardly survive the times for high oil prices.

Some people argue that flexible and elastic tax rate must be introduced in order to reduce the energy cost burdens on the ordinary people`s living and industrial productions. This will, however, merely be a makeshift measure to temporarily alleviate their suffering. Rather, we should let the domestic oil prices fluctuate according to international prices so that business firms and individuals are induced thereby to reduce their energy consumptions.

Nation-wide energy saving efforts are called for here by launching such drives as the use of automibiles in a ten-shift system, wearing enough underwears for winter work at reduced heating offices and workshops,reduction in the use of unnecessary commercial neon lightings and subway escalators. For that reason, we will keep our watchful eyes on the government`s comprehensive oil price measures which are expected to come out of the economic ministers` meeting on Friday presided by the Prime Minister.