No source of oil in korea
Despite of highly advancement of economic development, Korea heavily depends on other countries in terms of oil supply and other raw material. Since Korea has no domestic source of oil, acquiring enough oil supply has been one of the major issues in Korean economy. In fact,
High oil price has many undesirable repercussions in korean society. first of all, it will lead to the inflation of general goods made of oil-related materials due to the increase of production and distribution cost. This high price will make Korean product less competitive in the global market. Thus, negative impact on export is expected. On the other hand, since oil is the primary source of the steam power plants, utilities will be increased as well as public transportation fees.
- growing demand of oil ( e.g. increasing number of vehicle)
- increasing oil price
- development of alternative energies
Rapidly increasing oil price is certainly one of the principal issues in Korea economy especially, in times of economic recession these days. while there is no definite cause or reasons proven in terms of who raises the oil price, many institutions forecast the impact of high oil price on Korean economy. One of statistics is that annual economic growth rate would be dropped by 0.5% if oil price and raw material go up by 10%. Trade balance sheet will also be worse, decreasing 2.46 billion dollars while consumer price would go up by 0.23% according to the report of KORCHAM. It is generally believed that high oil price will make the situation toward the vicious cycle, compounding weak dollar and high price of raw materials.
1973~4 the 1st oil crisis 1978~80 the 2nd oil crisis due to the raise of oil price by OPEC and limited supply.