SEOUL, July 15th,2007 (WAM)-- South Korea's moves to generateatomic power, use natural gas and build coal-fired thermal electricitygeneration plants have all helped reduce its reliance on crude oil, accordingto a report by the Ministry of Commerce, Industry and Energy said thecountry's.
It said the proportion of crude oil as an energy source plummeted from61.1 percent in 1980 to 43.8 percent last year.
This has effectively insulated electricity prices from the price ofoil, which has fluctuated wildly from an average of US$61.55 per barrelfor Dubai crude in 2006 to $49.37 in the previous year. On Friday a barrelof Dubai crude cost $70.12.
The report said that the positive results of diversification can beseen clearly in the country's electric power generation.
In 1980, 78.7 percent of the country's electric power was producedfrom oil, with atomic energy and coal-fired thermal power plants providing9.3 percent and 6.7 percent respectively. In that year, the country produced37,240 gigawatt-hours (GWh) of electricity.
A government official said that in 2006, oil generated a mere 4.3 percentof the 354,860 GWh of electricity produced by South Korea, with nuclearpower and coal accounting for 40.1 percent and 37.9 percent each. Liquefiednatural gas (LNG) made up another 16.1 percent.
South Korea officially started commercial atomic power generation in1978, with its first coal-fired thermal power plant opening in 1983. Thesewere supplemented by LNG in 1986.
"Because of such efforts, an ordinary Korean paid 76.43 won for onekilowatt-hour of electricity in 2006, up 50.2 percent from 50.88 won in1980," said Koh Jung-sik, deputy minister in charge of energy and resourcespolicy. Adjusting for inflation, electricity prices actually fell, withthe cost of one kilowatt-hour of electricity last year being 21.06 won,he added.
The official said that during the same time period, consumer pricesrose 365 percent, with bus fares jumping 10-fold from 90 won to 900 won.
(One U.S, dollar worth about 920 won) He also said that while South Korea's heavy industry-centered economymade it a leading importer of crude, it has made considerable stridesto raise energy efficiency in products used by its citizens, and to introduceeffective district heating systems."In 2006, the country imported $68 billion worth of crude oil and otherrelated products, but it actually used $23.4 billion in the domestic market,with the rest being refined and processed for export," the deputy ministersaid.
He said $20.5 billion worth of oil was refined and exported withina short time, with another $24.1 billion worth being used in manufacturedand petrochemical products that were shipped abroad.
He said that the wide-scale use of efficient district heating and theuse of energy-efficient appliances have all helped to reduce consumption.
"On average, South Korean-made products are more energy efficient thanthose made abroad, with many of its high-rise apartment buildings usingless energy to keep people warm or cool compared to U.S. homes of thesame size," Koh said.
The energy expert, however, said that there is still room for improvement,particularly in energy used in homes, shops, power generation and, tosome extent, in transportation.
"There is little leeway in terms of reducing oil used to make petrochemicalproducts or as fuel to drive buses, trains, ships and aircraft, but peoplecan do something about cutting back on gasoline use and power used inhomes, shops and factories," he said.
To highlight this claim, the government announced last week that therehas been a 6 percent improvement in the country's intensity number, whichfell to 0.345 last year, compared to 0.367 in 2002.
Energy intensity is a barometer of a country's ability to use energyin an economical manner, and is calculated as the unit of energy neededto produce US$1,000 worth of goods. The unit used is tons of oil equivalent(TOE).
High energy intensity translates into a high cost for converting energyinto gross domestic product, while low energy intensity indicates lessuse of energy to fuel the economy.
Meanwhile, the spokesman said that while there is pressure on the governmentto slash taxes on fuel, Seoul does not think the current situation warrantssuch steps.
This view is in line with the position taken by the Ministry of Financeand Economy, which has claimed that cutting the fuel tax, which accountsfor 60 percent of the price of gasoline, could put a hole in the state'srevenue earnings, but not benefit ordinary consumers, who would not feelany significant price cuts.
Taxes levied on fuel bring in more than 20 trillion won annually forthe government.
