The government said on the 23rd it will freeze the fourth maximum oil price, which takes effect for two weeks from 12 a.m. on the 24th, at the same level as the second and third rounds. As a result, the maximum wholesale price of gasoline that refiners supply to gas stations will be kept at 1,934 won per liter. Diesel is 1,923 won, and kerosene is 1,530 won.
On the day, Nam Gyeong-mo, Policy Advisor to the Minister at the Ministry of Trade, Industry and Resources, said at a briefing, "International oil product prices fell over the past two weeks by 8% for gasoline, 14% for diesel, and 2% for kerosene, creating room to cut the cap, but we decided to freeze it." He added, "We froze it so that it would have the same effect as raising prices to curb oil consumption."
He added, "There was a need to block inflationary pressures, as the March producer prices posted the biggest jump in four years." The Bank of Korea released on the 22nd that the March producer price index rose 1.6%, the biggest increase in about four years. Petroleum products account for 4.66% of the consumer price index.
Domestic refiners reportedly told the Ministry of Trade and Industry (MOTI) that if they reflected international oil product prices in wholesale prices without the fourth round of the price cap in place, gasoline would be around 2,200 won. They estimated diesel at around 2,800 won and kerosene at around 2,500 won. Based on this, Nam said, "The price-cut effect from the oil price cap is 260 won for gasoline, 870 won for diesel, and 970 won for kerosene."
After Prime Minister Kim Min-seok said the previous day, "We will carefully consider whether to implement the fourth round of the oil price cap," some read it as the government considering halting the cap. But Nam said, "We are not currently reviewing abolishing the oil price cap." He said, "If a cease-fire in the Middle East war makes progress and we judge that international oil prices have stabilized to some extent, we will review it."
The Ministry of Trade and Industry (MOTI) said it has not yet been able to estimate a specific amount for how much in losses the government should compensate refiners under the price cap. The government has secured about 5 trillion won in the supplementary budget for compensation of losses from the price cap. If refiners calculate their losses on their own and submit them by the end of June, the government plans to verify them and proceed with compensation.