[Gas Price Fact Check] Gas Stations Criticized for High Prices... Are They Making Excessive Profits?

Fluctuations in International Oil Prices and Petroleum Products
3-4 Weeks Needed to Reflect in Distribution Prices
Most Independent Gas Stations... Margins Only 1-2%

On the 6th of this month, citizens are refueling their vehicles at the Altteul Gas Station in Mannam Square Rest Area, Seocho-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

International oil prices have fallen, and the government has implemented a fuel tax reduction measure. However, the perceived fuel price at gas stations reaches an average of 2,070 KRW per liter nationwide. Are gas stations, which directly supply gasoline and diesel to consumers, making excessive profits?

According to Korea National Oil Corporation's Opinet on the 14th, the current gasoline price is about 2,070.01 KRW per liter, which is 75 KRW lower than 2,145 KRW on the 30th of last month before the fuel tax reduction. The distribution price is falling as the government's fuel tax cut and the drop in international oil prices occur simultaneously, but among consumers, there is a strong voice of dissatisfaction that the price is still "high."

First, there is a time lag in reflecting fluctuations in international oil prices in the distribution price at gas stations. The most important factor affecting gas station fuel prices is not crude oil prices but international petroleum product prices. The price set when domestic refiners supply gasoline to gas stations is influenced by the product price (MOPS) in the Singapore spot market.

The refiner's supply price is determined based on changes in international product prices from one week prior, and the gas station's selling price is set considering margins and regional conditions. Individual gas stations experience a 2-3 week lag while depleting their inventory. As a result, it takes 3-4 weeks for consumers to feel the impact of international oil and petroleum product prices.

It is also not feasible to immediately reflect the fuel tax reduction measure in general privately owned gas stations that are not directly operated by refiners and to urge them to lower distribution prices. Currently, the majority of gas stations nationwide are general privately owned stations. According to the Korea Gas Station Association, as of May, there are 11,064 registered gas stations nationwide. Among them, the directly operated gas stations where refiners are directly involved in management are only ▲SK Innovation 157 stations ▲GS Caltex 244 stations ▲Hyundai Oilbank 325 stations. Even if refiners or the Korea National Oil Corporation supply petroleum products that immediately apply additional fuel tax reduction measures through directly operated gas stations and budget gas stations, it accounts for only 20% of the total market volume.

While it is true that gas stations decide the final price, in fact, the selling price is determined according to the price supplied by refiners. Individual gas stations have limited room to intervene in price decisions. According to a survey by the Korea Gas Station Association, the average gasoline margin was 5-7%. After deducting credit card fees, loan and other financial costs, rent, labor costs, and utilities, the average operating profit margin of gas stations is only 1-2%.

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