As Winter Approaches, Diesel Prices Soar Past Gasoline... Concerns Over 'Energy Cold Wave'

Gasoline Prices Reversed for Half a Year
Breaking Records Since the Financial Crisis 14 Years Ago

Impact on Not Only the Freight Transport Industry
But Also Excavators and Overall Industries
Increased Burden on General Consumers

[Asia Economy Reporter Jeong Dong-hoon] Diesel, once called the ‘fuel for the common people,’ has been more expensive than gasoline for half a year, raising concerns about an ‘energy crisis’ ahead of winter when heating demand increases. Fundamentally, the diesel supply shortage has not been resolved, deepening consumers’ worries.

According to the Korea National Oil Corporation’s oil price information service OPINET as of the morning of the 1st, the average diesel price at gas stations was 1,870.82 KRW per liter, 210.65 KRW higher than the gasoline price (1,660.17 KRW per liter). In some regions, such as Jeju, diesel prices (2,009.0 KRW per liter) were recorded to be more than 300 KRW higher than gasoline prices (1,707.2 KRW per liter).

Diesel is used across industries including freight transport, manufacturing, agriculture, and metal industries. It is widely used not only in logistics sectors such as oil tankers, trains, and trucks but also in industrial sites with machinery like excavators, ready-mix concrete trucks, and generators, making it a key real economic indicator alongside cement for assessing economic conditions.

Diesel prices surpassed gasoline prices on May 11 (1,947.59 KRW vs. 1,946.11 KRW) and have maintained this reversal for over five months. This also broke the previous record of 1,947.75 KRW set in July 2008 during the financial crisis, marking a 14-year high.

Previously, gasoline was generally traded at a higher price than diesel due to higher taxes imposed on gasoline. In the 1970s and 1980s, gasoline was considered a luxury automotive fuel, while diesel was recognized as an industrial fuel contributing to national economic growth, leading to higher taxes on gasoline than diesel.

The decline in gasoline prices is attributed to additional fuel tax cuts starting in July this year and the drop in international oil prices. Gasoline prices, which rose to around 2,100 KRW in June, fell to about 1,700 KRW in August and further to around 1,600 KRW in September and October, showing a slight downward trend.

On the other hand, diesel prices showed a slight decline after the fuel tax cut but have gradually rebounded as winter approaches. The prolonged war between Russia and Ukraine has caused a diesel supply shortage in Europe, where many diesel vehicles use diesel as fuel. Refiners have structurally reduced diesel production due to decreased diesel consumption after COVID-19 and the expansion of eco-friendly energy policies.

The problem is that these high diesel prices are likely to persist. Since gasoline has usually been sold at a higher price than diesel domestically, consumers who chose diesel vehicles to save on fuel costs are now deeply concerned.

The refining industry believes it will be difficult to resolve the price reversal in the near term. A representative from the Korea Petroleum Association explained, "Diesel demand is increasing as winter approaches," adding, "The recent production cut decision by OPEC Plus (OPEC+) has stirred anxiety, widening the price gap."

Professor Lee Jeong-hee of the Department of Economics at Chung-Ang University predicted, "The global supply of fossil fuels is expected to remain continuously insufficient," and "Since diesel is widely used industrially, the burden will extend to general consumers as well."

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