Betrayal of 'Seomin Yeollyo'... Kerosene and Gasoline Prices Reversed in Some Areas

'Seomin Yeollyo' Kerosene Price Rising... Recorded 1,605 KRW per Liter
47% Surge in One Year... Gasoline Prices Surpassed in Some Areas
Supply Chain Instability... Fuel Tax Reduction Benefits Not Received

Soaring Diesel Prices
(Seoul=Yonhap News) Reporter Seo Daeyeon = Amid soaring diesel prices, a fuel dispenser hangs at a gas station in downtown Seoul on the morning of the 11th of this month.
According to the weekly domestic oil price trend data released by the Korea National Oil Corporation's oil price information portal Opinet on the same day, the diesel gas station selling price for the second week of November rose by 12.8 won from the previous week to 1,884.5 won per liter. 2022.11.11
dwise@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Junhyung] Kerosene, known as a ‘fuel for the common people,’ has continued its price rise, becoming more expensive than gasoline in some areas such as Busan. Due to increased demand for heating oil in winter, the soaring kerosene prices are expected to persist for the time being, deepening the worries of ordinary citizens.

According to the Korea National Oil Corporation’s price information service Opinet on the 18th, the average selling price of kerosene at gas stations nationwide was 1,604.74 KRW per liter as of the 17th. This is a 46.68% increase compared to the same period last year (1,094.02 KRW). Compared to the gasoline price on the same day (1,656.78 KRW), the difference is only 52.04 KRW per liter. While kerosene prices have risen nearly 47% over the past year, gasoline prices have actually decreased by 2.81%, from 1,704.62 KRW to 1,656.78 KRW per liter.

In some regions, a price reversal between kerosene and gasoline has occurred. In Busan, as of the previous day, kerosene was priced at 1,652.66 KRW per liter, which is 19.87 KRW higher than gasoline (1,632.79 KRW). On the same day, kerosene and gasoline prices in Daegu were similarly close at 1,617.56 KRW and 1,605.01 KRW per liter, respectively. In Daejeon, kerosene (1,629.34 KRW) was also sold at a higher price than gasoline (1,622.06 KRW).

The significant rise in kerosene prices began in March. Until January this year, kerosene was priced around 1,100 KRW per liter, about 500 KRW cheaper than gasoline. However, triggered by the Ukraine crisis, global supply chain instability increased, causing kerosene prices to soar. Consequently, kerosene prices rose to 1,347.82 KRW in March, 1,480.11 KRW in May, and surged to 1,686.55 KRW in July.

The causes are complex. First, the supply itself has decreased, and demand for heating kerosene has increased due to natural gas supply instability. The recovery of aviation demand, suppressed by COVID-19 this year, has also increased kerosene demand used in jet fuel production. Additionally, the existing low tax rate on kerosene means it does not effectively benefit from fuel tax reduction measures, which is also related to the rapid price increase.

The problem is that kerosene prices are likely to continue rising for the time being. The Organization of the Petroleum Exporting Countries Plus (OPEC+) has sharply cut crude oil production starting this month, causing international oil prices to rise again. Moreover, with heating demand increasing in winter, kerosene prices are bound to rise more than at other times.

Accordingly, there are opinions that measures such as strengthening the energy voucher program and temporarily reducing individual consumption tax are necessary. The government partially supports energy costs for vulnerable groups through the energy voucher program, but there are concerns about blind spots since the winter limit is only 145,000 KRW. In response, a Ministry of Trade, Industry and Energy official said, "There is an issue of needing to increase the (energy voucher) budget."

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