Gasoline Prices Rise for 25 Consecutive Days in the New Year... Consideration of Extending Fuel Tax Reduction

Concerns Over Prolonged Surge in International Oil Prices
Fuel Tax Cut Eased Ahead of April Deadline

On the 3rd, as international oil prices continue at their highest level in over seven years, the average domestic gasoline price is expected to exceed 1,800 won per liter. At a gas station in Seoul, gasoline is being sold at 2,095 won per liter. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Oh Hyung-gil] Gasoline prices have been on the rise for nearly a month since the beginning of the new year. There are concerns that prices could exceed 1,800 won per liter in Seoul despite the fuel tax reduction.

According to Korea National Oil Corporation's Opinet on the 6th, the gasoline price in Seoul recorded 1,687 won per liter on the 9th of last month and continued to rise for 25 consecutive days, reaching 1,744 won per liter as of the 3rd.

The government temporarily reduced the fuel tax by 20% from November 12 last year to April 30 this year to stabilize prices and ease the burden on low-income households. As a result, gasoline prices dropped by 164 won per liter, diesel by 116 won, and LPG by 40 won. Since then, gasoline prices had been on a downward trend.

However, with the recent escalation of the war crisis between Russia and Ukraine, international oil prices have risen to around $90 per barrel, the highest in seven years, which is believed to be driving up domestic gasoline prices.

In particular, some experts predict that prices could exceed $100 per barrel, raising concerns that gasoline prices will continue to increase for the time being.

Generally, it is known that international oil prices take about 2 to 3 weeks to be reflected in domestic petroleum prices. If the upward trend in international oil prices continues, it will be reflected in domestic selling prices, potentially offsetting the effects of the fuel tax reduction.

The government is considering extending the fuel tax reduction measure, which is scheduled to end at the end of April.

A representative from the refining industry said, "If the fuel tax reduction ends as scheduled under the current circumstances, a sharp rise in gasoline prices is inevitable," adding, "This will lead to inflation and directly impact the economy of low-income households."

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