To effectively deal with soaring oil prices, the government and Korea Energy Management Corp. held the 29th energy saving acceleration contest at the 63 Building in Seoul on November 7.
In 1985, the government designated November when energy consumption begins to rise rapidly as the "energy saving month" and since then it has implemented a variety of events to accelerate energy saving. Average oil price has continued to soar from US$61.5 in 2006 to US$67.4 in August 2007 and further to US$75.8 in October 2007.
The primary energy consumption has increased by about 3% each year for the past four years, but energy imports have increased by 20-30% each year, disproportionately large.
Thanks to such persistent energy saving efforts, the energy consumption increase rate has been on a decline. For instance, the primary energy consumption increase rate dropped from 7.8 percent in the 1980s to 7.5 percent in the 1990s and again to 1.8 percent in 2006, However, energy imports increased sharply because of high oil prices from US$49.6 billion in 2004 to US$66.7 billion in 2005 and further to US$85.5 billion in 2006.
It far exceeds the combined exports of the nation's No. 1 export item semiconductors (US$37.4 billion) and the No. 2 item, automobiles (US$32.9 billion) in 2006.
Accordingly, the portion of energy imports increased steadily from 24 percent of the total imports in 2001 to 22.1 percent in 2002, 21.4 percent in 2003, 22.1 percent in 2004, 25.5 percent in 2005 and 27.7 percent in 2006. The international trend of oil prices, based on Dubai oil, has increased by about US$10 per barrel, or about 20% on average, for the past four years. But the difference between 2006 and 2007 is only 5%, a sharp drop in the rate of increase. Crude oil remains the largest energy import to Korea by a factor of 5.
The nation's oil dependency ratio has declined gradually, whereas demand for electric power has steadily risen. The portion of oil dropped from 53.8 percent of the total in 1990 to 46.1 percent in 2003 and 43.6 percent in 2006, but per capital electric power consumption rose from 2,203kWh in 1990 to 6,126kWh in 2003 and further to 7,191kWh in 2006.
Owing to an increase in demand for electric power, the use of bituminous coal and atomic power has been increased persistently.
Although energy consumption in the industrial transportation sector has steadily increased, the total energy consumption has been on a modest decrease owing to a drop in energy consumption in the households, commerce and other public sectors.
In the latter half of 2007, international oil prices rose steadily owing to worries over Turkey's possible attack on Iraq, the OPEC's policy pursuing high oil price, geographical risk factors of Nigeria and Iran and shortage of global oil stockpiles.
Such high oil price trend is expected to continue in the latter half of 2007 and in 2008 because of oil producers' policy seeking higher oil price and the hurricane season of the United States. The highest oil price was US$96.6 per barrel for WTI and US$88.8 for Dubai oil recorded on Nov. 7.
Ahead of the winter season when demands for energy consumption soar, there is a growing possibility that the international oil price will go up to US$100 per barrel.
To effectively cope with high oil prices, which started to go up in 2003, the government has been pushing ahead with a three-year plan to improve energy intensity from 2005. Under the project, the government will improve energy intensity (toe/US$1,000) from 0.359 in 2004 to 0.328 in 2007.
Thanks to persistent energy saving efforts, the nation's energy intensity improved from 0.367 in 2004 to 0.359 in 2004 and 0.345 in 2006, showing that the nation is shifting to an economic structure of low energy-consumption type.