Diesel and Gasoline Prices Soar Unstoppably... Fuel Tax Cuts Prove Ineffective

Diesel and Gasoline Prices Rise by 32.8 Won and 1.9 Won Respectively
Diesel Hits All-Time High

"Prices Likely to Increase Next Week as Well"

On the 11th, fuel price information was displayed at a gas station in Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Chaeseok] Despite the expansion of the fuel tax reduction rate, prices of diesel and gasoline have turned upward as international oil prices soared. Diesel recorded a new all-time high.

According to Opinet, the oil price information service of the Korea National Oil Corporation, the average retail price of gasoline nationwide in the second week of May (May 8-12) was 1,942.6 KRW per liter, up 1.9 KRW from the previous week. Due to the expansion of the fuel tax reduction rate (from 20% to 30%) implemented on May 1, gasoline prices in the first week of May fell by 44.2 KRW compared to the previous week, but reversed to an increase within a week. A representative from the Korea Petroleum Association said, "The sharp rise in international oil prices offset the effect of the expanded fuel tax reduction rate, resulting in gasoline prices turning upward again," and added, "The upward trend is expected to continue until next week."

As of the afternoon of the previous day, the nationwide average gasoline price was 1,951.7 KRW per liter, up 3 KRW from the previous day. Seoul, the region with the highest domestic price, recorded an average gasoline price of 1,997.6 KRW per liter this week, up 9.5 KRW from the previous week, while Daegu, the region with the lowest price, showed 1,916.6 KRW, up 3.9 KRW from the previous week. By brand, GS Caltex gas stations were the most expensive with an average of 1,952.2 KRW per liter, and discount gas stations were the cheapest at 1,913.7 KRW.

The situation was more severe for diesel. The nationwide average diesel price this week was 1,939.7 KRW per liter, up 32.8 KRW from the previous week. The international diesel price surged by more than 10 dollars per barrel last week, which affected domestic diesel prices with a time lag, causing a significant price jump. On a daily average basis, the nationwide average diesel price surpassed gasoline from May 11 and set a new all-time high on May 12. Diesel prices being higher than gasoline prices is the first time in 14 years since 2008.

As of the afternoon of the previous day, the nationwide average diesel price was 1,959.2 KRW per liter, up 6 KRW from the previous day.

Recently, international diesel prices have risen to record levels due to a global diesel inventory shortage centered in Europe and supply-demand difficulties triggered by the Russia-Ukraine conflict. For this reason, domestic diesel prices are expected to continue rising until next week. International oil prices, which had been rising until last week, slightly declined this week. Dubai crude, the benchmark for domestic imported crude oil, fell by 2.2 dollars to 104.2 dollars per barrel compared to the previous week. The international average gasoline price dropped by 3.1 dollars to 134.3 dollars per barrel, and the international diesel price fell by 9.0 dollars to 153.3 dollars per barrel compared to the previous week.

The Korea National Oil Corporation analyzed, "International oil prices declined this week due to uncertainties over the European Union (EU)'s agreement on the ban of Russian oil imports and the Organization of the Petroleum Exporting Countries (OPEC)'s downward revision of the global oil demand forecast for this year."

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