Korea National Oil Corporation (KNOC) President Son Joo-seok issued a public apology and unveiled reform measures amid controversy that some budget gas stations excessively raised diesel prices in a short period after U.S. and Israeli strikes on Iran.
In an apology on the 11th, Son said, "At budget gas stations, which should take the lead in easing people's fuel costs and supporting price stability in the domestic oil products market, there were some instances of sharply raising retail prices in a short period, causing disappointment and inconvenience to the public," adding, "As the head of the corporation, I feel a heavy sense of responsibility and offer my deepest apologies."
Son explained that after the U.S. strikes on Iran, KNOC further cut its supply prices to budget gas stations to help people suffering from rising international oil prices and living costs, supplying at least 60 won per liter (L) cheaper than ordinary gas stations, but some independently run budget gas stations engaged in misconduct.
The budget gas station at the center of the controversy raised its diesel price by 606 won on the 5th compared with the previous day, the largest increase nationwide. KNOC said, "Through our daily price monitoring system, we immediately recognized the situation and issued guidance," adding, "The station has since lowered the price by 604 won and is maintaining a level cheaper than the regional average." KNOC added that it urged the station's owner to prevent a recurrence in a follow-up meeting.
Budget gas stations were introduced by the Lee Myung-bak administration to stabilize prices when international crude prices surged at the time. Organizations including Korea National Oil Corporation (KNOC) procure fuel from refiners through joint purchasing and supply it to budget gas stations. There are currently 1,319 budget gas stations nationwide. Of these, 395 are independently run budget gas stations managed by Korea National Oil Corporation (KNOC).
KNOC will completely overhaul its management system for budget gas stations to prevent similar cases from recurring. First, KNOC will introduce a "one strike out" system. If a station forces high-price sales even once without justifiable reason, its contract will be terminated immediately. In addition, gas stations with terminated contracts will face a permanent reentry ban, preventing them from rejoining the budget gas station program in the future.
In addition, KNOC plans to expand the scope of daily monitoring of sales prices at individual gas stations and establish a system that can respond immediately when signs of price anomalies are detected.