Moon Shin-hak, Vice Minister of the Ministry of Trade, Industry and Resources, said that even with a petroleum price cap in place, higher gas station prices are structurally unavoidable.
The Vice Minister appeared on CBS Radio "Park Seong-tae's News Show" on the 20th and said, "Even with a price cap, we introduced a system that reflects increases in international and refined product prices every two weeks." If the second capped petroleum price is announced on the 27th, gas station prices will inevitably rise.
Moon said, "Not all (petroleum) international product prices are reflected, but a significant portion of the increases in product prices can be reflected with a two-week lag," adding, "Because this is a system in which each economic actor must share the burden, we ask for your understanding in advance." He continued, "Consumers also need to conserve to some extent," and said the government is reviewing measures such as odd-even and 10-day driving restrictions for vehicles.
Regarding disruptions in crude oil imports due to instability in the Middle East, he called it an "emergency situation" and said the government could issue supply adjustment orders to refiners or impose export restrictions. On reports that the current strategic reserves of about 200 million barrels cover 208 days, he drew a line, saying, "Conversely, if we operate on a peacetime business-as-usual (BAU) basis that supports all economic activity as we do now, it cannot be 208 days."
Asked about the possibility of reducing refiners' export volumes, he said, "Of course." He emphasized, "The government can implement a price cap under the Petroleum and Petroleum Alternatives Business Act, issue supply adjustment orders, and impose export restrictions," adding, "We must simulate and assume scenarios where exports fall below 50% and prepare a plan B or emergency plan." He added that a legal basis is already in place to compensate refiners for legitimate losses.
Earlier, the government temporarily designated naphtha, which is facing shortages due to the Middle East crisis, as an economic security item and said it would secure alternative import sources and implement export restrictions.