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Government Considering Measures to Curb Oil Consumption

Posted July. 11, 2005 03:20,   


The price of Dubai crude oil, which accounts for 80 percent of South Korea’s total oil imports, reached over 55 dollars per barrel for the first time.

Accordingly, the Ministry of Commerce, Industry, and Energy (MCIE) is considering whether to introduce measures to check oil consumption, including a 10-day car-use rotation system.

However, Cheong Wa Dae and the business circle are negative on the forced consumption-checking measures, which they said might not be effective and have an adverse effect on domestic demand.

According to the Korea National Oil Corporation on July 10, prices of Dubai crude oil in the Middle East as of July 8 reached a record high of 55.40 dollars per barrel, up 0.90 dollars from the previous day.

Entering July, when prices of Dubai crude oil reached 53.85 dollars on average, the MCIE regarded the situation as in the “precaution” stage, the highest level in the early warning system for oil prices to consider some measures regarding the current oil prices.

There are four stages, including normality, concern, attention, and precaution, in the early warning system for oil prices the MCIE adopted. At the precaution stage, it can put into force some measures, including shortening lighting times of streetlamps at night, a compulsory 10-day or seven-day car-use rotation system, and restrictions on business hours at night of discount marts and golf driving ranges, which consume high amounts of energy.

The MCIE is planning to report to President Roh Moo-hyun on measures to check oil demand around July 15.

An official of the MCIE said, “As the Uri Party insisted on oil consumption-checking measures more strongly at a party-government consultative conference than the government did, we are considering shortening opening hours at night of discount marts and to introduce a seven-day car-use rotation system.”

However, the official added, “It is not certain that the consumption-checking measures will be put into force because President Roh mentioned that “high oil prices are not a temporary situation, and the long-term point of view is desirable.”

The Korea Chamber of Commerce and Industry (KCCI) showed a negative position through its “Suggestions on Energy Policy in the High Oil Price Age” on July 10, “Measures for checking consumption don’t merely have slight effects, but also weaken consumer confidence.”

The KCCI suggested alternative countermeasures, including the readjustment of energy prices to a realistic level through the market mechanism, enhancement of the energy efficiency of transportation, increases in investing in energy infrastructure, and the establishment of an effective energy-consuming lifestyle.

Jeon Moo, the team leader of the industrial environment division for the KCCI, said, “Restrictions on the night operation hours of discount marts and saunas can be a large burden to the current slack domestic demand,” adding, “A seven-day car-use rotation system during the holiday season could be inconvenient to consumers and hit tourism and self-employed people.”

Byong-Ki Lee Im-Sook Ha eye@donga.com artemes@donga.com