Oil prices affecting Korea

South Korea is having big troubles dealing with current high oil prices. Chosun Ilbo compares the lack of preparedness to Japan:

In Japan, 1.5 million small cars are sold each year, accounting for 30 percent of total auto sales. But in Korea, only 40,000 to 50,000 small cars are sold each year, accounting for just around four percent of total sales.

Chosun Ilbo also notes that in Korea, 60 percent of gasoline prices is tax, proposing that this leads to an unwillingness to act:

From a larger perspective, the more oil we consume, the more tax the government collects, naturally leading to a policy that supports increased tax revenues. The government needs to abandon this policy that stokes energy consumption. If the government cannot lower taxes on oil products and automobiles, then it must come up with measures ensuring that such revenues go into the development of energy-saving technologies.

Korea is trying to strengthen its auto fuel efficiency standards by 2012 to reduce green gas emissions. This is expected to accelerate the development of eco-friendly cars. Korea's Ministry of Commerce, Industry and Energy will tighten fuel economy standards for cars by 2012 by 15 percent compared to 2004 based on an agreement made with the auto industry in late 2005.

Why wait until 2012?

Minicars, such as the GM Daewoo Matiz as shown above with the usual "car show girls", is the only mini car model currently available in Korea. Its popularity has soared again during 2007. Selling more than 44,000 minicars in the time leading up to November, sales have increased by 42 percent. Why are minicars getting more popular? They offer much better mileage than any other car. Medium-sized cars get about 11.5 km per liter, but minicars can go 16.6 km. Wasting fuel seems increasingly silly with crude oil staying high at almost $100 per barrel.