Government Reviewing Countermeasures against High Oil Prices

Streetlights, advertisement boards, and other outdoor lighting equipment use time is expected to be reduced by force if the oil prices rise by more than 10 dollars per barrel from the current level in one or two months.

If the oil price keeps rising afterwards, a once-in-ten-days no-driving system will take effect, and business hours of nightclubs and driving ranges will be reduced.

The Ministry of Commerce, Industry, and Energy (MOCIE) is reviewing countermeasures to high oil prices such as the above, as oil prices keep climbing day by day.

MOCIE plans to finalize oil price measures and submit a report to the national energy conservation committee, which will be presided over by Prime Minister Lee Hae-chan on June 30.

The government has divided situations concerned with oil prices into four stages – stable, cautionary, warning, and serious. The current situation is “cautionary.”

A MOCIE official said, “If the oil prices jump by more than $10 in a month or two, the situation could escalate to the ‘warning’ level and various countermeasures could follow.”

The government is considering reducing night light equipment such as outdoor lights and streetlights, as well as a partial limitation on elevator use.

The next step includes a forced once-in-ten-days no-driving system and a reduction of business hours for businesses with extensive energy consumption rates.

Business hour reductions are planned to start with nightclubs and will gradually be expanded to nighttime driving ranges, sauna rooms, large markets, and other basic, “everyday businesses.”

Energy use may be largely divided into industrial, transportation, everyday, and commercial uses. The MOCIE claims that, among them, transportation, everyday, and commercial uses are where the most energy conservation is possible.

However, the government decided against a price intervention, such as lowering prices by cutting gasoline-related taxes. Oil prices have continued to rise since early this year rather than recording short-term spikes. This shows that the current high oil prices are not a one-time phenomenon but a structural problem that stems from the imbalance between supply and demand, claims the government. Therefore, the government explains, it could end up wasting budget money if it hastily engages in price intervention.

Along with such “shock therapy” methods to cut energy use, the government also plans to cooperate with other related ministries to expand telecommuting in the mid to long term

In addition, the MOCIE is considering whether to adopt an early warning system made up of 18 variables such as oil prices, supply and demand, and stored-up oil capacity.

Chang-Won Kim changkim@donga.com