Recently many motorists have complained about the higher pump prices as it cost them more when they filled up their tanks. Government officials, on the other hand, are scratching their heads and wondering when will crude oil prices stop climbing, as they have driven up general prices and placed greater pressure on the government to attain its 4-percent economic growth target this year.
Worries are growing because we have seen record high oil prices every other day for the past week, with the price rising above US$67 a barrel in New York on Friday due to a spate of refinery problems in the US. Foreign oil analysts said oil could reach US$75 a barrel in the next 12 months. But what scared us more was a report published in late March by Goldman Sachs that a "super spike" in oil prices might occur, and that oil could eventually reach as high as US$105 a barrel.
Economists at the Taiwan Institute of Economic Research (TIER,
Surely, high oil prices will clearly create headwinds and slow the economy down, but what economists can not answer is how long the persisting price crisis will last. What they can tell is that we are embracing a new era in which higher -- and more volatile -- oil prices become the norm.
At present, Taiwan imports 97 percent of its energy resources. According to government data, the nation imported US$13.1 billion worth of crude oil last year, up 37.9 percent from around US$9.5 billion the previous year. For the January to June period this year, oil imports totalled US$8.3 billion, and the number is expected to increase nearly 30 percent to US$17 billion this year, in accordance with the upward trend.
Rising oil imports have eaten into the nation's trade surplus as local refiners have to pay more to buy crude oil. To counter the impact of record crude oil costs, the nation's two refiners, Chinese Petroleum Corp (
There is no single explanation for why oil is so expensive, and the government is evaluating the impact of higher oil costs on economic growth and domestic consumer prices. But besides making evaluations, what strategy has the government adopted?
Look at Taiwan's rival: Current high crude oil prices have prompted several Chinese oil companies to seek exploitable oil resources elsewhere to help meet surging demand at home, although it has also resulted in a tense relationship between China and the US over who controls oil supplies, following the recent bid by CNOOC Ltd (中國海洋石油) for Unocal Corp.
Taiwan may find it hard to play a hand in such geopolitical struggles over energy sources, but what it needs to do is to search for renewable sources of power on the grounds of national and energy security concern. The question is: Has it done enough for itself? Has the government decided on what kind of industry is necessary for the sustained development of our economy? And what energy resources would better serve these industries? Also, have our motorists responded by driving smaller cars instead of big SUVs?
In other words, what the nation needs is a serious, rather than a ceremonial, attempt at energy conservation. There's not much Taiwan can do about rising oil prices, but these responses should certainly act to temper the long-term impact on the economy, and they must begin now.
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