Fuel Prices Curbed, but Demand Falls... Gas Station Sales Plummet

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Over the past month, domestic gas station sales have sharply decreased compared to the previous year. This trend runs counter to some interpretations suggesting that fuel price suppression policies would lead to increased demand.

On April 16, Yang Kiuk, Director General for Industrial Resources Security at the Ministry of Trade, Industry and Energy, stated at a daily briefing of the Middle East War Response Headquarters, "From the third week of March to the second week of April, total gas station sales reached 2,551,731 kiloliters, down 5.2% from the same period last year (2,690,734 kiloliters)."

By fuel type, gasoline sales were 1,107,161 kiloliters, a decrease of 1.8%, and diesel sales were 1,444,570 kiloliters, down 7.6%. Notably, the decline was more pronounced for diesel, which is in higher demand for logistics and livelihood purposes.

The decline is even more marked compared to the period before the war. Comparing the second week of April to the fourth week of February, which can be considered a pre-war baseline, sales dropped by 8.8% to 593,673 kiloliters. Gasoline sales fell by 11.0%, from 290,393 kiloliters to 258,542 kiloliters, while diesel sales decreased by 7.1%, from 360,784 kiloliters to 335,131 kiloliters.

The decrease is even greater when compared to the first week of March, right before the implementation of the price ceiling. Gasoline sales dropped by 13.8%, diesel by 10.1%, and total sales by 11.7%.

Director General Yang emphasized, "There was a perception that prices were quickly reflected after the outbreak of the war, but in reality, demand has decreased. It is important to look at the overall trend rather than comparing only specific weeks."

This decline is largely attributed to the impact of rising prices in conjunction with the spike in international oil prices. Currently, domestic gas station prices have approached 1,998 won for gasoline and 1,992 won for diesel, both nearing the 2,000 won mark.

The government is taking a "dual response" approach, simultaneously managing both demand contraction and supply instability. First, it has banned hoarding of seven key petroleum feedstocks derived from naphtha, such as ethylene and propylene, and related products, and can, if necessary, adjust production, shipping, and supply destinations. Director General Yang explained, "If stocks are kept at more than 80% above last year's level, it may be considered hoarding. This measure is intended to prevent bottlenecks in supply."

To encourage diversification of crude oil sources, the government has temporarily eased requirements and expanded limits for freight cost reimbursement from April to June. Spot contracts have also been included in the support to actively promote import diversification.

The sectoral impact remains limited for now. Key items such as infusion packaging and syringes for healthcare, and materials for semiconductors and automobiles, are currently maintaining normal inventory levels, and there are no supply disruptions. However, as some bottlenecks are occurring in certain distribution stages, the government has implemented additional measures, including the operation of a reporting center and the imposition of reporting obligations.

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