Korea is strongly dependent on crude oil imports and the world;;s fifth largest importer of crude oil. Oil is a limited and finite resources in some areas of the world. Korea relies on imports. Thus, the risk on uncertainties in supply and demand for oil is very high in Korea. Fuel oil consumption in the country accounts for transport and 33%, respectively. Currently petroleum accounts for 95% of transportation fuel. Gasoline and diesel which are fuel for transportation are very closely related to the lives of people and associated with a variety of policies. The policies are environmental policy, tax policy, the oil supply policy, renewable energy policy and regional policy. Thus, analysis about the effect of oil price on the oil consumption is the basis for future policy as this can have important implications. This study shows the impact of the petroleum product price on the petroleum consumption. Petroleum product is limited to transportation fuel(gasoline and diesel). This study is conducted based on the data limited to period (2003-2012) and 16 metropolitan cities. The data used in the research are petroleum prices, consumption, number of vehicles, population, GRDP, holiday season, the seasonal factors, the international oil prices, exchange rate and consumption of the previous month. 2SLS analysis and OLS analysis are used in this study. Each analysis is applied in each case of lagged variable is used and not used. This study shows that price elasticity of petroleum is different by kind of petroleum(gasoline and diesel) and region. Furthermore, government through the analysis of gasoline, diesel and other petroleum can establish the policies for petroleum price or supply&demand. Government can also predict the effect of the policies. According to the nature of the depletion of resources and the increasing need for alternative energy, alternative energy development plan can be urged.
PDF
download
878987797
028-85220240
