More than 10 days have passed since the implementation of the "oil price cap," but consumers say it is hard to feel prices coming down. As of on the 22nd, the price refiners charge gas stations for gasoline fell 105.9 won per liter, but the price consumers pay at gas stations dropped only 79.15 won per liter. The price cap applies only to refiners' supply prices and is not applied to retail prices at gas stations.
This appears to be because a considerable number of gas stations are not lowering prices, or are even raising them. According to Opinet (Korea National Oil Corporation (KNOC) oil price information site) on the 23rd, since the price cap took effect, 148 out of roughly 10,300 gas stations nationwide (1.44%) raised gasoline prices. At 511 stations (4.98%), gasoline is being sold at the same price as before the price cap.
◇ Gas station industry: "We can't cut prices further" vs. government: "You can cut them enough"
The gas station industry and the government are taking opposing positions over price cuts. The industry says it has no room for further reductions due to credit card fees and operating costs. An official at the Gas Station Association said, "From the roughly 100-won gap between the supply price and the consumer price per liter, once you subtract about 30 won in card fees and operating costs, the actual margin is only 10 to 20 won."
The Ministry of Trade and Industry (MOTI) flatly refutes this. A MOTI official said, "Since consumer prices were already raised along with supply prices, even if 100% of the supply price cut is reflected, existing margins are maintained," adding, "Card fees are ad valorem, so when the selling price goes down, the fees go down as well."
Meanwhile, some gas stations are sharply raising gasoline prices depending on surrounding commercial districts. One station at the entrance of the Cheongju High-Tech Valley industrial complex is maintaining a price 120 to 170 won per liter higher than nearby stations. This station raised prices by an additional 150 won after the price cap took effect. A Ministry of Trade and Industry (MOTI) official said, "It's because executives and employees of companies in the industrial complex can charge gasoline costs to corporate accounts," adding, "It's the same structure as when stations near the National Assembly kept prices higher than surrounding areas in the past."
◇ Government signals tax audits… "Effectiveness is uncertain"
The government has signaled tax audits to push for lower retail prices at gas stations. Minister Kim Jung-kwan of the Ministry of Trade and Industry (MOTI) said at a Cabinet meeting on the 17th, "They say (the reason they can't cut prices) is inventory, but by midweek that excuse will be gone," adding, "We will work with the National Tax Service to launch tax audits."
On this, some say the "effectiveness is uncertain." Simply having raised prices does not itself constitute tax evasion.
The government has decided to introduce a "good gas station" certification program for stations that lower retail prices under the price cap, but critics again say the "effectiveness is uncertain." A gas station owner said, "It says if you become a good gas station you'll get a commendation, but it's hard to find a reason to cut prices."