Opinion Leaders' Digest 03-08
Date : February 28, 2003
Author : KIM Young-Yong, yykim@chonnam.ac.kr
Professor, Economic Dept, Chonnam University

For efficient energy saving

As international oil price hikes sharply up to around US$30 due to the imminent US attack to Iraq and domestic situation of Venezuela, a policy is taken to control consumption of the energy in order to save it. Some of major counter-measures include 10-shift operation of private cars, lights-out of neon signs after a fixed time and every other floor service of elevators, etc. Administrative order to control the air-conditioner temperature in summer is to control consumption of electric power as well.
Positive cooperation of the general public of whole communities would be imperatively crucial for effective enforcement of energy saving counter-measures, based upon the citizens' high volunteerism.
The author points out, however, that the pattern of human action would not so easily change to new situation, rather resisting the energy saving measures. The cost of its policing would not be small. The author reviews energy saving policies.

Energy saving by 10-shift operation of the private cars
Under this policy, peoples are ready to rely on walk, bicycling or public mass transportation such as bus or subways. Especially the public mass transportation service would be most effective way to save energy because of its economy of scale. In order to accommodate the increased passengers who abandon their private cars on their shift days, there would be certainly increased demand of taxis, more increased and more frequent services of buses and subways. This also requires additional policeman power to enforce this 10-shift system, diverting from police manpower demands of social security. This is accordingly not so effective way to save energy, as experienced in the past.

Effective ways to save energy
The surest way to save the energy is to let energy price go up in the market reflecting the situation of demand and supply. Price hike of energy will reduce its consumption. Increased energy price will induce the peoples to save lights, to control the temperatures of the air-conditioners and to refrain themselves from driving cars. They will more rely on smaller cars, bicycles, walks or even running. More peoples will stay at home, reluctant to go out. All of these are alternatives to reduce energy consumption in broader sense.
Traffic congestion charge is a very effective way to save energy and to control the traffic congestions in heart of cities. Now London just adapted this system, effective Feb. 17. A certain amount is charged in case of the demand of traffics exceeding the supply of road capacity. This proves that increase of the traffic price is the most effective way as in London, traffics into the heart of London has been reduced by 25% compared the other days since this congestion charge was introduced. The author argues that, in the course of time, traffic reducing effect would be weaker, as the demand of traffics into heart of large cities would increase due to the increased income, not due to the diminished price effect.

Incentives of savings
Daily life would become rather inconvenient more than ever under the situation of controlled energies. Our life always faces problem of scarcity value, as resources are scarce while human desire is enormously large. Accordingly price hike is unavoidably the best solution, thus enabling the consumers to save the resources. Even the goods like the energies regarded as the most indispensable in our today' life should be subject to the free market price mechanism as its most effective solution to check the excess consumption. Message of short supply of crude oils caused by the Middle East crisis and Venezuelan situations should be communicated to all the parties of economy by means of price hike so that they may adjust themselves to the shortage of energy. Price change has most effective influence to the pattern of consumers' consumption. No other alternatives may be more successful than this.¡á
(Abstracted and re-edited in English by JUNG Churle, a CFE Research Fellow, jungchrl@unitel.co.kr)