Government drops gas prices on highways for Chuseok
Korea will lower gasoline and diesel prices by 100 won per liter (26 cents per gallon) at 226 highway stations during the Sept. 24 to 27 Chuseok holiday while also extending nationwide fuel tax cuts and price caps.
People refuel their cars at a gas station at a rest area on the Gyeongbu Expressway in Seocho District, southern Seoul, on Sept. 18.NEWS1
The government will cut gasoline and diesel prices by 100 won per liter (26 cents per gallon) at multiple highway gas stations nationwide managed by the government during the Chuseok holiday, extend fuel tax cuts for another two months and keep the limit on oil prices at its current level.
The measures aim to ease fuel costs as international oil prices rise again amid growing uncertainty in the Middle East.
“The government will maintain its emergency response system and work to stabilize energy supplies and prices as uncertainty over the situation in the Middle East grows,” Deputy Prime Minister and Finance Minister Koo Yun-cheol said during a meeting at Government Complex Sejong in Sejong on Friday.
During the Chuseok holiday from Sept. 24 to 27, a total of 226 gas stations on national expressways operated by Korea Expressway Corporation will lower gasoline and diesel prices by 100 won per liter from their Thursday levels.
The Korea Oil Station Association (KOSA) criticized the measure, saying it would effectively force “privately owned gas stations to close.”
“The policy would distort price competition,” KOSA said.
The association said privately owned gas stations are already struggling with declining profitability due to high oil prices and the fuel price cap. It argued that cutting prices only at highway gas stations would inevitably drive customers away from other gas stations.
The government, however, will also extend fuel tax cuts, which were scheduled to expire at the end of this month, through the end of November. The tax reduction will remain at 15 percent for gasoline and 25 percent for both diesel and liquefied petroleum gas, or LPG, butane.
People refuel their cars at a gas station at a rest area on the Gyeongbu Expressway in Seocho District, southern Seoul, on Sept. 18.NEWS1
The 10th fuel price cap, which was due to take effect for four weeks starting at midnight on Saturday, will remain at the same level as the ninth cap. The maximum wholesale prices that refiners can charge gas stations and other buyers will therefore remain at 1,784 won per liter for gasoline, 1,773 won for diesel and 1,380 won for kerosene.
The government has now frozen the cap for three consecutive rounds after cutting the seventh cap by 150 won per liter from the sixth cap on June 27.
The fuel price cap, introduced in March, has now continued beyond the six months the government originally expected, but the government's position is that extending the system remains necessary because international oil prices remain unstable.
Concerns over disruptions to crude oil supplies have grown following an attack on an oil pipeline in Saudi Arabia, sending international oil prices higher again. Dubai crude, which had remained below $100 per barrel as recently as Sept. 1, rose above $100 on Sept. 2 and reached $128 on Wednesday.
A gas station in Seocho District, southern Seoul, is seen on Sept. 13.YONHAP
Domestic gasoline prices, meanwhile, have continued to fall under the fuel price cap.
The nationwide average price of regular gasoline at gas stations fell for 18 consecutive weeks after reaching 2,011.75 won per liter in the second week of May. It stood at 1,858.62 won in the third week of this month, according to Opinet, an oil price information service operated by the Korea National Oil Corporation.
The government estimates that without the fuel price cap, gasoline would cost more than 100 won per liter more and diesel more than 350 won more at gas stations.
As the price cap stays in place longer than planned, calls are growing for the government to find a way to end the policy as the cost of compensating refiners for their losses continues to rise.
The government has set aside 4.2 trillion won in reserve funds to compensate refiners for their losses. It has also allocated 1.4 trillion won from the regular budget of the Ministry of Trade, Industry and Resources for the same purpose.
