Busan and Daegu, Gasoline Prices Drop to 1,500 Won Range

Reduction of Oil Tax and Release of Stockpiled Oil... Decline in International Oil Prices

Starting from the 12th, ahead of the 20% reduction in fuel tax, a gas station in Yeouido, Seoul, is selling gasoline at 2,215 KRW per liter. According to Opinet, the oil price information service of the Korea National Oil Corporation, the nationwide average gasoline price at gas stations for the fourth week of October (October 25-29) was 1,762.8 KRW per liter, up 30.3 KRW from the previous week. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Hwang Yoon-joo] Following the reduction of the fuel tax, the average price of gasoline has dropped to the 1,500 KRW per liter range in some regions. With the decision by major oil-consuming countries, including Korea, to release strategic reserves at the proposal of the United States, gasoline prices are expected to continue declining alongside the falling international oil prices.

According to the Korea National Oil Corporation's oil price information service Opinet, as of 9 a.m. on the 24th, the average gasoline prices in Busan and Daegu were recorded at 1,598 KRW and 1,599 KRW per liter, respectively. This is the first time the average gasoline price has fallen to the 1,500 KRW range after previously exceeding the 1,800 KRW range before the fuel tax cut.

Gasoline prices are expected to fall further. Along with the fuel tax reduction, major oil-consuming countries such as Korea, the United States, China, Japan, India, and the United Kingdom have decided to release strategic reserves. This measure follows the U.S. proposal to stabilize soaring gasoline prices. Korea plans to release a total of 3.17 million barrels of government strategic reserves over three months starting January next year. This volume is similar to the 3.467 million barrels released during the 2011 ‘Libya crisis.’ The 3.17 million barrels to be released represent about 3.3% of Korea’s total government strategic reserves of 97 million barrels.

Since the U.S. proposed the release of strategic reserves (November 23, local time), international oil prices have shown a slight downward trend. Dubai crude, the main crude oil imported by Korea, reached a yearly high of $84.3 per barrel on October 25. However, it dropped from $81.8 on November 24 to $73.5 as of the previous day, one month later. The decision by the Organization of the Petroleum Exporting Countries (OPEC)+ to maintain its production increase policy after the emergence of the COVID-19 variant ‘Omicron’ (November 26) has also contributed to stabilizing international oil prices.

The international gasoline price, which serves as the benchmark for domestic gasoline prices, has also slightly declined. The international gasoline price hit a yearly high of $103.6 per barrel on October 26 but fell to $89.3 as of the previous day following the news of coordinated strategic reserve releases. Accordingly, domestic gasoline prices are expected to continue their downward trend.

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