The energy crisis requires a conservation strategy, not a public relations response
Joseph Cheng – Updated on Jul 02, 2008 – SCMP
The sharp rise in oil prices recently prompted hundreds of truck drivers to block traffic in Central, demanding the government to scrap the tax on diesel. This has been a worldwide phenomenon. Many governments were confronted with protests from drivers, fishermen and others whose livelihoods are threatened by high oil prices.
It is expected that the government will concede to the demands of the truck drivers who have seen their incomes slashed. Scrapping the tax on diesel, however, goes against the principles of energy conservation and environmental protection, and reinforces the perception that interest groups that exert pressure on the government can secure concessions.
The coming Legislative Council elections in September mean that even pro-establishment political parties are eager to please certain interest groups. The decline in the government’s popularity, and its recent controversies, have weakened its political will to stand firm.
According to government statistics, the price of diesel for vehicles rose 12 per cent between January and April this year, and at present the tax on diesel amounts to only 5 per cent of its retail price. Scrapping the diesel tax will not significantly cut overall fuel prices, and its impact on truck drivers’ incomes will be very limited. If oil prices continue to rise, the impact of dropping the tax will disappear.
In contrast, the government seemed to have adopted a more reasonable policy in responding to applications to raise ferry fares. It allowed the ferry companies to lease the ferry piers for commercial purposes, thereby giving the operators an extra source of profit and creating less pressure to raise fares. The benefits to consumers are direct and obvious.
There is no way of telling how scrapping the diesel tax would benefit truck drivers and consumers. It might favour logistics companies instead: the government has no mechanism to monitor the process.
Much more significant, if we believe that rising energy prices is a permanent global trend, and if we all support the principle of environmental protection, then the government must have a long-term strategy for energy conservation. Hong Kong is a sophisticated metropolis; but in comparison with major European cities, we are obviously behind in energy conservation and environmental protection.
If oil prices approach US$200 or even US$225 a barrel by 2012, what will be the impact on our economy and society?
Cities in Western and Northern Europe have absorbed the lessons of the two oil crises in the 1970s, and they have spent great efforts on energy conservation. They have developed satisfactory mass transit systems and discouraged the use of private cars. Urban planning facilitates pedestrians and cyclists.
To achieve the objective, the metropolitan authorities have to develop long-term plans. They also have to change people’s lifestyles and values. Transport reform not only aims to conserve energy, but also to reduce pollution and promote healthy living.
Oil prices have quadrupled or quintupled in the past five years or so, but neither the government nor the community have given it much serious thought. Air pollution in the central business district has been deteriorating. Private cars are an obvious source of pollutants, but Hong Kong people generally have done little to improve the situation. We cannot put all blame on the government; we all have our share of responsibility.
From a purely economic point of view, the transport industry is in deep trouble. Truck drivers work fewer and fewer hours and their incomes have plummeted. The diesel tax is certainly not the main issue. The government, however, still considers logistics one of the territory’s four pillar industries.
At the very least, a review is needed. The government should initiate a large-scale study of the problems and challenges facing the industry, especially its future development on a cross-border basis.
The government subscribes to the principle of “small government”, and normally does not want to interfere in the economy. This is well supported by Hong Kong people. But it lacks vision, and often considers major issues from a public relations point of view. This can only lead to an erosion of its legitimacy.
Joseph Cheng Yu-shek is a professor of political science at City University of Hong Kong