Gov¡¯t feeling out various countermeasures for oil crisis

With the conflict in the Middle East intensifying and the growing possibility of disruptions to crude oil shipments, the government has prepared emergency measures such as the adoption of a ceiling on consumer market prices for oil-related products.

A source at the Ministry of Finance and Economy revealed on Sunday that the government is considering emergency measures such as the implementation of a price ceiling, the adoption of an elastic tax rate and the release of reserve oil.

The ceiling price measure would prevent gasoline companies from raising consumer prices beyond the price set by the government. To minimize the losses of gasoline companies, the government is proposing subsidies through the Oil Price Buffer Fund. The government currently has about 400 billion won in the fund.

The government also is examining an elastic tax rate in the event that the current high prices are temporary and will provide a short-term cut in import taxes while the prices remain high. By enacting these measures, the government hopes to stabilize the domestic consumer prices of oil-related products.

However, it is widely known that the release of oil currently on reserve will be the final countermeasure should all others fail and the situation worsen.

Kwon Soon-Hwal shkwon@donga.com