By Lee Hyo-sik
Staff Reporter
Finance-Economy Minister Kwon O-kyu Tuesday said the government will unveil measures to cope with rising oil prices early next month after consulting with the National Assembly.
The reaction came out as politicians and civic groups began calling for lowering tax rates on oil products.
Minister Kwon said the government is planning to draw up a comprehensive steps to mitigate the oil price shock on the economy as a $100 per barrel price has become a probable scenario.
Among possible steps that may be taken are making it mandatory for drivers not to use their vehicles one day out of the week and placing restrictions on light, air conditioning and heating. Along with the energy saving steps, electricity rates and airfares could also increase this year to reflect rising oil prices.
``The government has not made the steps compulsory because such measures greatly inconvenience people's lives and are not cost-effective. But as international oil prices have soared to over $90 per barrel, we are considering a wide array of measures to deal with the situation,'' an official of the Ministry of Finance and Economy said.
On Monday, West Texas Intermediate (WTI) soared to an all-time high of $93.53 per barrel for the December delivery in New York on news that Mexico shut a fifth of its production because of a hurricane and the fall in the dollar to a record low. Also, Dubai crude, which accounts for most of South Korea's oil imports, reached $83.41 per barrel, the highest price ever.
Another ministry official said it is currently studying the effects of a weak dollar and a strong won on prices of domestic gasoline and other petroleum products. He also said it will look into tax rate cuts on oil products as one of possible measures to cope with rising oil prices .
Despite growing pressure to cut taxes on oil, the government has said that people would consume more fuel if taxes were reduced.
At the parliamentary inspection last week, Kwon said with carbon emissions emerging as a global problem, it is not right to lower oil taxes, saying that a tax cut would be likely offset by growing margins at gas stations and only eat into tax resources.
He also said no country copes with the oil price hikes with tax cuts, but added that the government would consider it if the ruling and opposing parties reach an accord.
Currently, tax accounts for 57.7 percent of gasoline prices, which is much higher than 40.9 percent in Japan and 12.9 percent in the United States but lower than over 60 percent in some European countries.
The government collected 23.5 trillion won taxes on oil last year, up 31.9 percent from 2002. Oil-related taxes during the last five years amounted to 103.8 trillion won.