Are Consumers the Only Suckers? The Reasons Behind Rising Fuel Prices in South Korea and Consumer Concerns.

Fuel prices in South Korea continue to rise steadily. The price of gasoline, which was 1,569.79 KRW per liter on July 1st, surged to 1,748.95 KRW per liter on September 4th. During the same period, diesel prices also increased from 1,379.99 KRW to 1,638.62 KRW, with respective growth rates of 11.4% and 18.7%. This steep price increase is adding to the burden of ordinary citizens, prompting the government to extend the reduction in fuel taxes.

 

In conclusion, there are still many opaque factors behind the reasons for the rising fuel prices in South Korea and consumer dissatisfaction.

 

Certainly, the increase in international oil prices is one of the major reasons for this surge. However, there are still lingering doubts about whether domestic fuel prices are adequately reflecting fluctuations in international oil prices and whether fuel tax reduction measures are being accurately applied. Despite government monitoring of market selling prices, there is no legal basis to ensure that international oil prices and fuel tax reductions are properly reflected.

 

In addition, the Energy Consumer Watchdog (E-consumer), an organization representing energy consumers, has raised concerns about the price increases imposed by domestic oil refineries and gas stations. E-consumer stated, "During July and August, international gasoline prices increased by 145.55 KRW per liter, but domestic oil refineries raised their supply prices by 147.63 KRW per liter. Moreover, gas stations raised prices by an additional 30.19 KRW per liter." This suggests that both the oil refining industry and gas stations did not fully reflect international prices.

 

While according to E-consumer's data, there were cases of manipulation by oil refineries and gas stations, there were more instances where prices were adjusted higher or lower than expected. This discrepancy has led to public reactions such as "something seems off with fuel prices."

 

The oil industry argues that "there is typically a lag of about 2-3 weeks between international oil price changes and domestic oil price adjustments. When considering this lag, fluctuations in international oil prices are adequately reflected in domestic prices." Additionally, oil companies explain that they rely more on exports than domestic sales, and the profit margins in the domestic market are lower.

 

The gas station industry also states, "When international oil prices rise, we cannot immediately sell the gasoline we purchased at a higher price at a lower rate just because international prices have dropped." They emphasize that fuel prices are influenced by the supply prices set by oil refineries.

 

However, what is crucial is that the trend of domestic fuel price changes should exhibit a similar curve to that of international oil price fluctuations when graphed. Yet, there are often instances where such consistency is not observed. This inconsistency creates confusion among consumers.

 

Thus, Doo Scoop has observed that domestic fuel prices do not move in parallel with international oil prices and has conducted a comparative analysis between the export prices of petroleum products by domestic oil companies and domestic supply prices. Through this analysis, it was confirmed that domestic oil companies are maintaining gasoline prices at higher levels.

 

In conclusion, there are still many opaque factors behind the reasons for the rising fuel prices in South Korea and consumer dissatisfaction. A clear understanding and transparency are required regarding the relationship between international and domestic fuel prices, the profit structures of oil refineries and gas stations, and how government measures affect fuel prices. This will help alleviate the concerns of South Korean consumers about why they seem to be the ones bearing the brunt of fuel price increases.