Only One Place Nationwide Sells Gasoline Under 2000 Won... Soaring Fuel Prices, What About the Commute?

A gas station in downtown Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Hwang Sumi] Domestic oil prices continue to hit record highs, showing a sharp upward trend. Among gas stations nationwide, only one station had a gasoline price below 2,000 KRW per liter, while some stations even surpassed 3,000 KRW per liter.

According to Opinet, the oil price information service of the Korea National Oil Corporation, the average retail price of gasoline at gas stations nationwide was 2,129 KRW per liter as of the 25th. This is about a 1.2% increase from the previous week (2,103.99 KRW). Domestic gasoline prices have been setting new records daily since surpassing the all-time high of 2,062.55 KRW on the 11th (2,064.59 KRW), the highest in 10 years and 2 months.

Notably, on this day, only one gas station nationwide had a gasoline price below 2,000 KRW per liter. The Start Gas Station (Hyundai Oilbank) in Suncheon-si, Jeollanam-do, was the cheapest at 1,994 KRW per liter. On the other hand, a gas station with gasoline prices exceeding 3,000 KRW per liter also appeared. The Seonam Gas Station (SK Energy) in Jung-gu, Seoul, sold gasoline at 3,096 KRW per liter, the most expensive. The difference between the lowest and highest prices reached about 55.3%.

Diesel prices are also on the rise daily. The average retail price of diesel on this day was 2,146.36 KRW per liter, up 1.65% from the previous week (2,111.48 KRW). The domestic average diesel price has been hitting new highs every day since surpassing the 2,000 KRW mark for the first time last month.

Domestic oil prices are soaring due to global sanctions against Russia, which invaded Ukraine. As sanctions against Russia, the world's third-largest oil producer, continue, supply uncertainties have increased, leading to a decrease in crude oil inventories. Additionally, factors such as the easing of lockdowns in major Chinese cities and the start of the U.S. driving season (June to August) have combined to increase crude oil demand, fueling price rises.

International petroleum product prices are typically reflected in domestic prices with a 2-3 week delay. Considering the recent strength in international oil prices, the industry expects domestic oil prices to continue rising for the time being.

However, there is a possibility that oil prices may temporarily decrease starting in July. The government announced that from July 1, the fuel tax reduction rate will be expanded from the current 30% to the legal maximum of 37%.

Meanwhile, despite the soaring oil prices, domestic gasoline and diesel consumption actually increased last month. According to Petronet, the petroleum information site of the Korea National Oil Corporation, the combined consumption of gasoline and diesel in May was 24.822 million barrels, a 43.0% increase compared to April.

Previously, domestic gasoline and diesel consumption had been declining monthly. It decreased from 21.996 million barrels in January, 18.492 million barrels in February, 18.424 million barrels in March, to 17.355 million barrels in April, before rebounding in May.

This is believed to be the result of a significant increase in nationwide mobility due to the lifting of COVID-19 social distancing measures and the May outing season. The shift from remote work, which was temporarily adopted due to COVID-19, back to office commuting also had an impact.

There is also an analysis that the expansion of the fuel tax reduction from 20% to 30% starting in May contributed. Reports about the expansion of the fuel tax cut from early April led many consumers to postpone purchases, and then a kind of 'pent-up' effect occurred as suppressed consumption revived in line with the timing of the expanded fuel tax reduction.

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