South Korea’s ruling party, the Democratic Party, has introduced an emergency energy plan to stabilize its economy amid tensions in the Middle East, which have disrupted oil and gas supplies from the region via the Strait of Hormuz. Since they import their energy sources in full, they are changing their power supply strategy to reduce their reliance on costly Liquefied Natural Gas (LNG). To achieve this, they are removing production limits on coal plants and accelerating maintenance for six reactors to increase their usage to 80%.
To safeguard consumers, a price ceiling on gasoline has been set at 1,724 won ($1.15) per liter and will be revised every two weeks. Early results show this has already begun to lower pump costs. Additionally, the government is preparing a supplementary budget to be passed within ten days of submission. This emergency fund will provide energy vouchers for citizens, compensate oil refiners for the price caps, and offer financial “logistics vouchers” to help exporters manage rising international transport costs.
The plan also focuses on protecting heavy industry. The Yeosu petrochemical complex may be designated a special crisis zone to cope with critical raw material shortages, including naphtha. To avert factory shutdowns, the government has decided to freeze naphtha exports at last year’s rates and seek alternative import sources. The three-pronged strategy to shield the people of South Korea from the global energy crisis includes increasing electricity availability, capping prices, and providing financial support.
