Although eight years have passed since the oil shock took place, today we cannot emphasize the importance of the oil problem too much.
1. The characteristics of the structure of energy demand in Korea are as follows:
First, the price elasticity of t...
Although eight years have passed since the oil shock took place, today we cannot emphasize the importance of the oil problem too much.
1. The characteristics of the structure of energy demand in Korea are as follows:
First, the price elasticity of total energy demand is conciderably small in comparision with that of foreign countries.
Second, the income elasticity of total energy demand is much larger than that of foreign countries.
Third, in a time lag that the fluctuations of energy price and income have an effect on the energy consumption, the main advanced countries nearly show the immediate response. But the rise and fall effects of energy consumption in Korea happen for the first time after one or two years elapsed.
Fourth, while energy and capital have the easy substitutional relation each other comparatively, energy and labor have the relation difficult to be substituted.
Fifth, the manufacturing sector in Korea has a rigid structure that the substitution between the source of energy is extremely small in the energy demand.
Sixth, when we view the national economy as a whole, coal and oil have the relation to be substituted very easily, but electric power and other source of energy don't have the relation to be substituted at all.
Seventh, the substitution between oil products cannot be compared with Korea because of the absence of foreign cases.
But when we analyze the inferred results, we can see that because the substitution relations between each manufactured goods get entangled, the adjustment policy of price and the demand of the amount of materials reflect the fact hard to give satisfactory results actually.
2. The energy supply and the development of substitute energy The structure of energy supply in Korea has the prominent characteristics as follows in comparision with that of the advanced conturies and the main developing countries. First, the degree of external dependence of energy supply is being deepened. The degree of energy self-support in Korea decreased sharply from 53.2% in 1970 to 27.4% in 1979. Therefore, the degree of external dependence of energy supply is being deepened seriously. Second, the proportion that the oil occupies in the structure of energy supply is increased more and more despite of the two round of oil shocks. The degree of oil dependence in Korea was sharply increased from 46.5% in 1970 to 61.0% in 1979 and has been sustained 60% since 1980. This fact results from the rapid increase of oil demand, the maintenance of economic structure to consume lots of oil and the small substitution between the source of energy by the continuity of the rapid economic growth.
On the and hand, for lack of capital and technique in comparision with the advanced countries in the development of substitute energy, Korea doesn't make much efforts about the source of non-consumption-recoverable substitute energy like the salar heat.
3. The long-term prospect of energy demand-supply. The long-term demand-supply programs of energy in Korea have the characteristics as follows. First, the rate of economic growth and an increasing rate of energy price assumed for the prospect of demand and supply of energy are very optimistic. While an annual everagy growth rate of economy by 2,000 years is assumed at a high rate of 8 to 10%, an annual averagy increase rate of energy price is comparatively assumed at a low rate of 5 to 11%. On the other hand, as compared with the assumption of growth rate of demand-supply prospect attempted in the foreign countries, that of the advanced countries is assumed at a rate of 1 to 4%, that of the developing countries at a rate of 2.8 to 6.3%, and the in-creasing rate of energy price at a rate of 11 to 15%.
Second, as a natural recult of these optimistic assumptions about the most important income and price determining the energy demand, if follows that the annual average rate of total energy demand in Korea is expected to reach 9.2 to 10.3% by 2,000 years. On the contrary, the annual average rate of energy demand in the advanced countries and the developing countries is respectively expected to reach 1.5 to 2.4% and 5.3 to 6.2% by 2,000 years. Third, while the relative importance that the oil occupies in the total energy demand-supply in the year 2,000 is expected to reach 38% and 26% respectively in case of the world as a whole and all the members of IEA (International Energy Agency), in case of Korea it is lower than the present level, but is still expected to reach a high rate of 43 to 54%.
4. The program for rationalization in the energy demand supply. When the economy in Korea faces the enrgy crisis and fries to establish the rational structure of energy demand-supply to be able to cope with it successfully, the above several suggestive points will have to be considered. To cope with the energy crisis to come in the future flexibly, the structure of energy demand and the economic structure with lost of weaknesses should be improved without delay. The adjustment of such structure of energy demand-supply will have to be projected in the following four directions. First, in the side of energy demand, the price elasticity should be larger than the present situation and the income lasticity should be smaller in a big jump. Because it is desirable that the price elasticity becomes more than one and the income elasticity becomes less than one at all, though the structure of energy demand isn't necessarily rational. And under the structure of energy demand in which the fluctuation of energy price has an effect on the energy demand through the intermediate course of the income change-that is, rather the income machanism than the price machanism governs the demand-supply edjustment is very difficult through the price policy in short term, and in the long term there is a lot of possibilities that the energy crisis can press the income severely. Second, the technical renovation should be encouraged in order that the flexible substitution can be made between energy and other factors of industry, between the sources of energy. In particular, in order to increase the energy substitution of labor, the qualitative level improvement of labor force is essential, and the production technique or the introduction of production process that each source of energy in the manufacturing sector can be substituted and used easily should be more expanded.
Third, in the side of energy supply the use of oil substitute energy like coal and gas and so on should be more promoted and the relative importance of it should he increased. To lead the use of substitute energy, the readjustment work of mode of production and mode of life should be also kept abreast socio-economically. Fourth, in relation to the energy-saving economic structure, the heat efficiency of energy not far reaching the level of the advanced countries should be increased in order to decrease the proportion of the lost energy extremely and to complete the economy on energy consumption.