As the government has kept in place for more than a month a "maximum oil price system" that caps prices of petroleum products, gas stations are facing deepening business difficulties as it has been confirmed that sales volumes have fallen despite efforts to curb fuel prices. Ninety percent of gas stations in Korea are independently run by individual business owners.
According to data released by the Ministry of Trade, Industry and Resources on the 17th, total gasoline and diesel sales during the first and second phases of the maximum oil price system (the 3rd and 4th weeks of March, the 1st and 2nd weeks of April) were 2,551,731 kiloliters (kL). That was down 5% from the same period a year earlier (2,690,734 kL). In three of the four weeks, excluding the fourth week of March, petroleum product sales fell year over year.
By contrast, sales of petroleum products increased in the first week of March, immediately after war broke out in the Middle East on Feb. 28 and before the maximum oil price system was implemented. During this period, gasoline and diesel sales were 672,554 kL, up 8% from the same period last year (621,371 kL). As fuel prices rose sharply at the time, so-called speculative demand appears to have played a role as people judged that "now is the cheapest" and filled up in advance.
After criticism that gasoline and diesel consumption actually rose following the implementation of the maximum oil price system, the government released compiled data on actual petroleum product sales the day before to counter the claim. But from gas stations' perspective, the figures confirm that product sales have declined. Because lower sales volumes directly affect gas station revenue, it means operations have become more difficult.
Rising gasoline and diesel prices are cited as the reason for the drop in petroleum product consumption. As of 8 a.m. that day, the average gasoline price at gas stations nationwide was 1,999.33 won and the diesel price was 1,993.23 won, on the verge of breaking 2,000 won. Before the war (Feb. 27), the nationwide average gasoline and diesel prices at gas stations were 1,692.58 won and 1,597.24 won, respectively. On the day before the maximum price took effect (Mar. 12), they were 1,898.78 won and 1,918.97 won.
Gasoline sales were similar this month, but diesel in particular fell sharply. This month's diesel sales were 673,860 kL, down 14% from the same period a year earlier (782,901 kL). Diesel is a key power source used across industries that underpin the national economy, including freight, shipping and construction. The spike in oil prices and the impact of the war are seen as freezing the real economy.
An operator of a gas station said, "Customer numbers are down to about half of usual," and added, "Compared with nearby company-operated and budget gas stations, the price difference is about 10 won per liter, but with sales halved, it's hard even to cover labor costs."
Another gas station operator said, "As diesel prices rise, it feels like livelihood truck owners are cutting back on driving or shopping around and going to other gas stations," and added, "Fuel costs run into the hundreds of thousands of won a month, and even a 100-won-per-liter increase in diesel makes a difference of tens of thousands of won."