Gasoline Prices at Gas Stations Slightly Drop After 11 Weeks... Impact of US Strategic Petroleum Reserve Release

National Average 2000 KRW per Liter, Down 1.9 KRW from Last Week
As of Yesterday 1996 KRW... Domestic Fuel Prices Likely to Decline

A diesel price sign showing 2,450 won at a gas station in Seoul on the 27th of last month. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Moon Chaeseok] Domestic gasoline prices at gas stations have slightly decreased for the first time in 11 weeks. Recent declines in international oil prices have led to expectations that prices may fall further.

According to the Korea National Oil Corporation's oil price information service Opinet on the 2nd, the average retail price of gasoline nationwide for the fifth week of March (3.27~31) recorded 2,000.1 KRW per liter, down 1.9 KRW from the previous week. As of the afternoon of the previous day, it had dropped to 1,996.48 KRW per liter.

Domestic gasoline prices had risen for 10 consecutive weeks from the third week of January until last week due to the impact of rising international oil prices, before slightly declining. This is due to the slight drop in international oil prices since mid-last month, influenced by progress in ceasefire negotiations between Russia and Ukraine and the US interest rate hikes. Typically, domestic fuel prices follow international petroleum product prices with about a two-week lag.

The average gasoline price this week in Seoul, the region with the highest prices, fell by 10.1 KRW to 2,068.5 KRW per liter compared to the previous week, while Gwangju, the region with the lowest prices, recorded 1,976.6 KRW per liter, down 1.6 KRW from the previous week. Gas stations in Seoul, which have a high inventory turnover rate, can quickly reflect changes in refinery supply prices, so price changes due to oil price fluctuations tend to appear relatively faster than in other regions. By brand, GS Caltex gas stations were the most expensive with an average of 2,007.7 KRW per liter, while budget gas stations were the cheapest at 1,971.4 KRW. However, the nationwide average diesel price at gas stations rose by 1.7 KRW to 1,919.8 KRW per liter compared to the previous week.

On a weekly average basis, diesel prices also rose this week, but the daily average price has been gradually declining since peaking at 1,920.4 KRW on the 28th of last month. As of the afternoon of the previous day, the nationwide average diesel price was 1,916.9 KRW per liter. International oil prices, a leading indicator of domestic fuel prices, declined this week due to the US decision to release strategic reserves and the lockdown in Shanghai, China, due to COVID-19. Dubai crude, the benchmark for imported crude oil in Korea, fell by 3.2 dollars to 108.8 dollars per barrel compared to the previous week.

The international average gasoline price was 123.9 dollars per barrel, down 5.4 dollars from the previous week, and international automotive diesel was 143.7 dollars, down 4.1 dollars from the previous week. A representative from the Korea Petroleum Association stated, "Although domestic gasoline prices may fall further due to the decline in international oil prices, the high oil price situation continues, so prices are unlikely to drop to a significant level."

Meanwhile, the government has extended the 20% fuel tax reduction, which was scheduled to end at the end of this month, by three months. Additionally, it is considering expanding the fuel tax reduction rate from the current 20% to 30%, with a decision planned for the 5th. If the fuel tax reduction rate is expanded to the legal maximum of 30%, the tax on gasoline per liter will decrease to 574 KRW. This represents a reduction of 246 KRW compared to before the fuel tax cut and 82 KRW compared to when the 20% reduction was applied.

This content was produced with the assistance of AI translation services.