It was found that in the eight days since the U.S.-Israel airstrike on Iran, the average retail price of gasoline at domestic gas stations jumped more than 200 won per liter and diesel rose more than 317 won. In February, before the Middle East situation, weekly price increases were only 2 won for gasoline and 5 won for diesel. The government is cautiously considering whether to introduce a "maximum price designation system" for the first time in 30 years.
According to Opinet, the oil price information system of the Korea National Oil Corporation (KNOC), on the 8th the nationwide average was 1,893.3 won per liter as of the morning, up 3.9 won from the previous day. The nationwide average price of diesel rose 4.82 won to 1,915.37 won per liter. As of Feb. 28, when this Middle East situation erupted, the average domestic prices of gasoline and diesel were 1,692.89 won and 1,597.86 won, respectively. In just eight days, they jumped 200.41 won and 317.51 won.
Currently, the nationwide average prices of both gasoline and diesel are on the verge of 2,000 won. In Seoul, where fuel is the most expensive nationwide, the averages reached 1,945 won (gasoline) and 1,968 won (diesel), and the stations recording the highest prices were 2,598 won (gasoline) and 2,658 won (diesel), already well past the mid-2,000 won range.
The government plans to review whether to introduce the maximum price designation system after monitoring domestic oil price trends this weekend and next week. This is a system that President Lee Jae-myung ordered to be reviewed at a temporary Cabinet meeting at the Blue House on the 5th. Although the current Petroleum Business Act, Article 23, provides the basis for the system on the premise of "when import and sale prices of petroleum fluctuate significantly or are likely to fluctuate," it has not been invoked even once since oil prices were liberalized in 1997.
Although international oil prices are rising due to the Middle East situation, the government judges that there is a problem with domestic petroleum prices surging without the usual two-week time lag. A government official said, "It appears there is a real tendency for domestic prices not to be reflected as quickly when international oil prices fall as when they rise."
However, the government is approaching the issue cautiously. An official at the Ministry of Trade, Industry and Resources said, "Because we must comprehensively consider market side effects, it is difficult to anticipate the timing of introducing a maximum price system."
If the government artificially intervenes in the market through the maximum price designation system to suppress prices, refiners and gas stations could see profitability deteriorate, leading to reduced supply volumes or reluctance to sell. There are also concerns that this case could set a precedent for frequent direct government intervention in the market.
Before introducing the maximum price designation system, the government also plans to review other options such as expanding the fuel tax cut and releasing strategic reserves. The Ministry of Economy and Finance is currently considering an additional fuel tax cut. It is also stockpiling 208 days' worth of crude oil and petroleum products that can be released in emergencies such as wartime. Separately from strategic reserves, the government recently decided to urgently bring in 6 million barrels of crude oil from the United Arab Emirates (UAE) that can be used immediately.