Solution to rising oil price

By Jay Kim

Concerns about the price of gasoline, which has recently reached $4 per gallon in the United States, are mounting among Americans.

In Korea, things are much quieter, although the rising price of oil and gasoline costs consumers nearly twice as much as in the United States. There seems to be only resignation among Koreans at the higher prices, while those with power and money do not appear to be overly concerned about it.

The poor have no way to know why oil prices are rising at this rate. It is not the case that the consumption of oil suddenly increased to cause a shortage of supply and no war has broken out against Iran either. So people just seem to think that oil prices are simply growing in proportion to the prices of other goods.

Unlike in the United States, the people in Korea do not tenaciously ask the government why the price of gas is rising and what measures it will take against it. It might be because Koreans are generally not considered too aggressive against their own government. However, the lack of ways to predict how high gas prices will go only frustrates the poor more.

Americans believe that the high price of oil is caused not by a shortage of supply but by the vicious manipulations of speculators to make money out of the unstable state of affairs in the Middle East. As gasoline prices have increased 19 percent while economic growth is just 2.5 percent, it is hard to avoid the criticism that President Barack Obama’s plan for economic recovery has failed.

So, Obama has declared a war against soaring oil prices. Also, both the Republican and Democratic Parties are speaking with one voice in trying to hold down gasoline prices. First of all, the U.S. government decided to release part of the 727-million-barrel Strategic Petroleum Reserve for 60 days.

In response to speculators deviously using the Iran nuclear crisis, the government also reached an agreement with Saudi Arabia for them to increase oil production by 20 percent at least. In addition, politicians in Washington tentatively agreed on the need of a new law to stop the tyranny of the vicious oil traders and industry since the current law, following the principles of the free market, cannot stop them from raising prices.

So where does this leave Korea? Does it have any solution to the surging oil price? It does not seem to be the case. The Korean government is considering reducing oil taxes, but I wonder whether this would be enough. Furthermore, Korea’s oil transport route is a long and hard journey.

The distance from the Persian Gulf to the refineries in the southern part of Korea is 25,000 kilometers. This is the distance of 30 round trips from Seoul to the southeastern port city of Busan. It is no surprise that the oil price is so high in Korea. Moreover, the nation’s oil route is the most dangerous sea route.

Because of Iran, the Persian Gulf is dangerous to pass through, and even after passing through it, a tanker has to go through the Indian Ocean, where India and Pakistan are in a standoff. After these two dangerous seas, it has to go through the Strait of Malacca, infested with pirates.

Several-hundred-thousand-ton oil tankers with the Korean flag have to transport oil non-stop, risking lives.

This rough oil passage has been protected so far by the United States. The Seventh Fleet of the U.S. Navy, which covers the West Pacific Ocean, is protecting the route.

The whole world is now making every effort for energy conservation. If the cost of energy rises, American consumers will seek alternatives to reduce the cost. There are significantly less cars on the roads in the United States than usual. However, one cannot find any glimpse of energy conservation in Korea. I am stunned that even though oil prices have reached a historic high, oil consumption has increased by 7 percent from last year.

Who in the world are those that splash out on oil? They are probably not the people who have to pay for the oil they use. This is why lawmakers and high-ranking officials in the government should set an example by using the subway to get around Seoul.

A policy that allows only one car per family and makes it mandatory for any additional car to be an environment-friendly electric one is also needed. Everyone should unite to conserve oil. This is the way Korea can survive the energy crisis.

Jay Kim is a former U.S. congressman. He serves as chairman of the KimChangJoon US-Korea Foundation. For more information, visit Kim’s website (www.jayckim.com).

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