South Korea is considering expanding energy vouchers for vulnerable households and boosting domestic power generation as rising global fuel prices linked to the Middle East conflict threaten to push up electricity costs.
Industry Minister Kim Jung-kwan said the government would take steps to stabilise energy supply and ease the burden on households if energy prices continue to climb.
The measures come as the crisis involving the United States, Israel and Iran sends oil and gas markets into turmoil, raising concerns in countries that rely heavily on imported energy.
Heavy dependence on imports
South Korea, the world’s fourth largest economy in Asia, depends almost entirely on foreign energy supplies.
According to data from the Korea International Trade Association, the country imports about 70 percent of its oil and roughly 20 percent of its liquefied natural gas from the Middle East.
That dependence leaves the country vulnerable to supply disruptions and price spikes if conflict in the region affects shipping routes or production.
Boosting nuclear and coal power
To reduce reliance on LNG, the government is preparing to increase electricity production from nuclear and coal power plants.
The climate and energy ministry said it would accelerate the restart of nuclear reactors currently under maintenance. Two units are expected to return to operation as early as March, with four additional reactors scheduled to restart by mid May.
Officials also said coal fired power generation could be increased when air pollution levels are relatively low, particularly if LNG supplies are disrupted or become too expensive.
These measures are aimed at stabilising electricity supply while limiting exposure to volatile global gas markets.
Expanding energy support
At the same time, the government is considering increasing financial assistance for households struggling with higher energy costs.
South Korea currently operates an energy voucher programme for low income and vulnerable groups. The programme had a budget of about 500 billion won last year, which remains valid through May, and another 500 billion won allocated for this year.
Officials said the government could expand that support through a supplementary budget if global energy prices continue to rise.
Fuel price controls
Authorities have also moved to limit the immediate impact of rising fuel costs on consumers.
On Friday, the government introduced a cap on the wholesale price of gasoline, setting the maximum price at 1,724 won per litre.
For many workers, particularly those who rely on fuel for their livelihoods, the surge in prices remains a major concern.
Park Jong se, a cargo truck driver with more than three decades of experience, said drivers have been forced to constantly check fuel prices at different stations as costs rise.
Analysis
South Korea’s response highlights the difficult position of energy importing economies during periods of geopolitical instability.
With limited domestic resources, the country must rely on a combination of policy tools including subsidies, price controls and adjustments to its power generation mix.
Restarting nuclear reactors and increasing coal output may provide short term relief by reducing reliance on imported LNG. However, such measures could also complicate South Korea’s long term climate goals.
At the same time, expanding energy vouchers reflects growing concern among policymakers about the social impact of rising energy costs, particularly on low income households.
If tensions in the Middle East continue to disrupt global energy markets, South Korea and other import dependent economies may be forced to rely more heavily on domestic power generation and targeted government support to shield consumers from prolonged price shocks.
With information from Reuters.
