[Choice Times=Cho Jeon-hyuk, Distinguished Professor at Kwangwoon University]

The Strait of Hormuz has been blocked. The lifeline through which 70% of our crude oil passes has been cut off in an unprecedented supply crisis. Private refiners hold barely about 60 days’ worth of reserves.

According to experts, even when government stockpiles are included—and once export commitments are taken into account—a “petroleum crisis” around April–May will be hard to avoid. The arteries of the national economy are on the verge of seizure, yet one can only laugh in disbelief at the measures the government has put forward. This is not policy—it is a “once-in-a-generation comedy.”

Out of nowhere, the government has introduced a “maximum gasoline price system.” With global oil prices hovering above $100 per barrel, it proposes to artificially cap domestic prices.

But “price” in a market is not just a number. It is the most powerful signal that resources are scarce and must be conserved. The government, however, has smashed that signal light and turned on a fake green light, effectively saying: “Don’t worry about fuel prices—use as much as you want.”
— Cho Jeon-hyuk, Distinguished Professor at Kwangwoon University

Even a student who has taken an introductory economics course would not prescribe such a crude remedy. Suppress prices, and demand explodes while supply evaporates. Refiners will not sell at a loss and will withhold supply, while consumers—unaware of the severity of the crisis—will continue to burn fuel freely. It is like pouring fuel onto the speed at which reserves are being depleted. The cost of distorting market mechanisms will inevitably return as a full-blown crisis—one in which “even with money, fuel cannot be obtained.”

Even more astonishing is the “odd-even driving restriction” card that follows. On one hand, the government stimulates consumption through a price cap; on the other, it swings a stick telling people not to drive.

So should people drive or not? It is like a bizarre fashion show—wearing a traditional jeogori on top and blue jeans below, strutting down the street in incoherent style.

Does this government even have economists? Or is it filled only with half-baked ideological leftists who believe that handing out freebies, forcibly taking back resources, and issuing commands will make markets obey? The economy is not a machine that can be controlled by directives. Policies that choke the market will inevitably backfire.

If the government truly wants to overcome this crisis, what is needed is not populism but honesty. It must say: “Fuel is scarce—let’s conserve. We must endure high prices for the time being,” and allow market prices to naturally curb demand.

Distorting market signals for the sake of votes and resorting to coercive enforcement against gas stations will not avert the looming supply cliff. A patchwork policy dressed in “jeogori and blue jeans” will only make matters worse.

What is more dangerous than incompetence is the arrogance of trying to suppress the market. The price of that arrogance will be paid by citizens standing helplessly in front of dry fuel pumps.

#EnergyCrisis #MarketDistortion #PolicyFailure