Industry Minister Visiting Gas Station Urges "Restraint on Price Increases"

Minister Andeok Geun of the Ministry of Trade, Industry and Energy recently visited the Mannam Plaza gas station on the Gyeongbu Expressway for an on-site inspection of the rising fuel prices. Minister An (left) is observing the fuel volume measurement inspection. Photo by Huh Younghan younghan@

원본보기 아이콘

The government has urged the refining industry to refrain from raising prices as domestic gasoline prices continue to rise for six consecutive weeks due to instability in international oil prices. The soaring fruit prices that fueled inflation last month are likely to continue until the new fruit harvest, and since the government cannot control international oil prices, there is no clear solution for stabilizing consumer prices other than the participation of domestic refiners.

On the 14th, Ahn Deok-geun, Minister of Trade, Industry and Energy, visited the Mannam Square gas station and liquefied petroleum gas (LPG) charging station in Seoul to check the trends in petroleum and LPG prices and discussed measures to stabilize domestic oil prices with industry and public institutions.

With the ongoing Russia-Ukraine war and instability in the Middle East, international oil prices have recently exceeded $80 per barrel. Domestic gasoline prices rose for six consecutive weeks from the end of January, reaching 1,639.1 KRW per liter in the first week of March, and diesel prices reached 1,540.1 KRW per liter, increasing by 75.4 KRW (4.8%) and 67.1 KRW (4.6%) respectively.

Earlier, the government extended the temporary fuel tax reduction, which was scheduled to end at the end of February this year, until the end of April. The temporary fuel tax cut, first introduced in 2021, has been extended eight times and is still in effect. The tax reductions currently applied are 205 KRW per liter for gasoline, 212 KRW for diesel, and 73 KRW for LPG butane.

The Ministry of Trade, Industry and Energy holds weekly meetings to ensure the effectiveness of the fuel tax reduction by monitoring the reflection of international oil prices in domestic prices. Additionally, to crack down on illegal activities exploiting the rising oil prices, a government-wide petroleum market inspection team is operating, and special inspections are being conducted on about 1,600 gas stations with a history of violations.

To stabilize LPG prices, the tariff on LPG has been reduced from the existing 3% to 0% during the first half of this year. As a result, despite the rise in international LPG prices, the domestic LPG supply price has been frozen for the past four months.

The problem is that there are no immediate measures to stabilize gasoline prices other than the previously announced plans. A Ministry official said, "In the situation where the external factor of international oil prices is rising, currently there is no clear method other than ensuring the effectiveness of the fuel tax reduction and increasing the number of budget gas stations," adding, "Expansion of the fuel tax reduction rate will be decided later through consultation with related ministries and depending on international oil price trends."

The Ministry plans to select about 40 additional self-operated budget gas stations mainly in the metropolitan area and large cities within this year to induce price reductions through competition. As of last week, the price of gasoline at budget gas stations was 1,609.5 KRW per liter, which is 29.6 KRW lower than the average price (1,639.1 KRW).

Minister Ahn said, "The government regards price stabilization as the top priority of the livelihood economy and is mobilizing all available policy tools to stabilize petroleum and LPG prices," and urged, "We ask the refining and LPG industries to demonstrate the spirit of coexistence."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.