A month of 100 won-price cut has little impact and consumer complaints rise
Retail fuel prices in Korea are rebounding on high international oil prices, despite refiners’ price cut of 100 won ($0.09) per liter a month ago.
The state-run Korea National Oil Corp. attributed this to the rising price of petroleum in the country, predicting that the trend would continue in coming months.
The price cut by local refiners has shown a 60-won-per-liter reduction, a far smaller drop than the industry and consumers had expected.
The price of gasoline in the country ranged from 1,945 won-1,946 won per liter during April, but started climbing at the beginning of May.
The average price of gasoline and diesel in the country reached 1,951.23 won and 1,796.52 won per liter, respectively, on Friday, according to KNOC, while the benchmark Dubai Crude Oil marked $114.40 per barrel.
The lack of impact from the cut in the price of supply has spurred a blame game between refiners and gas stations.
A gas station in Yeouido, central Seoul, sells gasoline at 2,230 won per liter Friday. (Kim Myung-sup/The Korea Herald)
The former claimed that gas stations did not reflect the reduced supply price in their retail prices. Gas stations said the international oil price hike at the time of reduction offset the local price-cut’s impact.
Starting with leading oil refiner SK Innovation, the nation’s oil refiners, also including GS Caltex Corp., S-Oil Corp. and Hyundai Oilbank Co., have slashed the price of gasoline and diesel by 100 won from April 7.
The measure was adopted as local oil firms came under government pressure to cut margins. The nation is fighting an uphill battle to curb inflation caused by soaring international commodities prices.
The government and oil refiners have been at loggerheads over how to stabilize fuel prices.
Despite oil firms’ claim that the real culprit is taxes, which account for nearly half of local fuel prices, the government has been reluctant to cut tax on fuel.
But because of the lack of impact from the cut in supplier prices, the government may be consider cutting customs charges and taxes on fuel in a bid to contain prices.
“The government does not deny the need for a fuel tax cut. We are mulling when and how much would be appropriate,” Finance Minister Yoon Jeung-hyun said on April 18.
By Koh Young-aah (email@example.com