Fourth Round of Petroleum Price Freeze: Refiners Sigh as "Price Gap Remains"

From midnight on April 24, gasoline at 1,934 won, diesel at 1,923 won
"Freeze in place to curb consumption despite drop in global oil prices"
Industry: "Difficult to view international oil prices as simply declining"

The government’s decision to freeze the fourth round of maximum prices for domestic petroleum products is deepening concerns within the refining industry. Despite the policy’s stated aim of stabilizing the market through demand management, there is growing apprehension in the industry about accumulating losses and widening price gaps due to the prolonged maximum price system.

On the 17th, fuel prices were displayed at a gas station in downtown Seoul. Photo by Yonhap News

According to the Ministry of Trade, Industry and Energy on April 24, the fourth round of maximum prices, effective for two weeks from this day, are set at 1,934 won per liter for gasoline, 1,923 won for diesel, and 1,530 won for kerosene. While domestic prices should have declined in line with the recent drop in international oil prices over the past two weeks, the government explained that by keeping prices at the same level as the second and third rounds, it has effectively raised prices.

Industry officials have expressed concerns that the latest decision does not adequately reflect the trend in petroleum product prices. One industry insider stated, “Even though international oil prices have decreased somewhat, they still exceed the maximum price. In particular, the gap between international and domestic diesel prices remains significant.” The source added, “While we understand the policy objective of stabilizing oil prices, the burden of accumulating losses is growing.”

There are also arguments that the recent trend in international oil prices cannot be simply characterized as a downward phase. Another official pointed out, “Although the Singapore spot index (MOPS) has declined, the Dubai crude oil price index, which is a key indicator for Middle Eastern oil, has been on a steady upward trend recently. Therefore, it is difficult to say that international oil prices have only fallen.”

The government maintains that it decided to freeze prices in consideration of ongoing instability in international oil prices and the need for demand management during a supply crisis. This decision is interpreted as aiming to prevent a potential increase in oil consumption that could result from a price cut. While there was some discussion about a slight increase to help alleviate the ongoing financial burden on refiners and the national budget, the government ultimately prioritized maintaining price stability for the public.

However, the government’s promised measures to compensate for losses remain unspecified. An industry official commented, “We are still waiting for the government to present a clear formula for compensating refiners’ losses. Although 4.2 trillion won was allocated in the supplementary budget, there are concerns that further fiscal injections will be unavoidable.”

Gasoline prices at gas stations are expected to remain around the current level of 2,000 won for the time being. According to Opinet, the oil price information system of Korea National Oil Corporation, as of 9 a.m. on this day, the national average gasoline price at gas stations was 2,006.17 won per liter, up 0.41 won from the previous day. The average diesel price rose by 0.22 won to 2,000.06 won.

The average gasoline price in Seoul was 2,043.5 won per liter, an increase of 0.72 won from the previous day. The average diesel price in Seoul also rose by 0.78 won to 2,030.5 won. While the pace of domestic fuel price increases has slowed recently, prices remained stable on the first day of the fourth round of the petroleum maximum price system.

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