Reduce the 'Seomin Burden'... Industry "Efforts to Immediately Reflect 30% Fuel Tax Cut in Gas Prices from May 1"

"Doing Our Best to Shorten Inventory Clearance Deadline After Government Measures"

A gas station in Seoul./Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Moon Chaeseok] As the government decided to expand the fuel tax reduction rate from 20% to 30% for three months starting next month on the 1st, the petroleum industry announced on the 12th that it will "reflect the price reduction immediately upon the implementation of the system and supply accordingly."

The Korea Petroleum Association, Korea Petroleum Distribution Association, and Korea Gas Station Association stated that they will reflect and supply the additional reduction immediately on the day the expanded fuel tax reduction takes effect on the 1st of next month. They also plan to apply it to the selling prices at company-operated gas stations on the same day. This is to accelerate the consumer's perception of the effect. The distribution organizations, including the Petroleum Distribution Association and Gas Station Association, said they will actively cooperate to ensure that the price decrease from refiners is reflected as quickly as possible in the prices at dealerships and gas stations. They expressed agreement with the government's intention to further reduce the fuel tax.

Gasoline and diesel are structured such that refiners purchase crude oil overseas, distribute it through dealerships to privately operated gas stations, and then sell it to consumers. Refiners also sometimes distribute directly to company-operated or self-operated gas stations. Because of this, the fuel prices consumers pay at gas stations are generally known to be reflected in prices about two weeks later than international oil prices. This has inevitably led to consumer complaints such as "Why does the gasoline price not drop even though international oil prices are falling?"

The associations explained that before the additional fuel tax reduction, it may take some time for privately operated gas stations and other businesses to deplete their existing inventory supplied at previous prices, so it may take a certain period for consumers to feel the effect. They plan to minimize this period as much as possible to ensure the fuel tax reduction effect is quickly reflected in prices.

The government had previously raised the fuel tax reduction rate from 15% to 20% on November 12 last year and planned to implement it until the end of this month. Due to soaring energy prices caused by various factors such as Russia's invasion of Ukraine, which increased the burden on ordinary citizens, the government decided to further raise the reduction rate from 20% to 30% for three months starting from the 1st of next month. Once confirmed at the Cabinet meeting on the 26th, it will be implemented from the 1st of next month.

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