Gov’t implements fuel price cap system amid rising oil prices

(News1)

The South Korean government has implemented a temporary fuel price cap system at midnight on Friday, limiting the price at which oil refiners can supply fuel to gas stations, as oil prices surged following a war between the United States and Iran.

The government held a task force meeting of relevant ministers for special management of consumer prices on Thursday, chaired by Deputy Prime Minister and Minister of Finance and Economy Koo Yun-cheol, and discussed this stabilization measure for petroleum product prices.

The finance ministry plans to officially announce the maximum prices for a two-month period until May 12.

According to the Ministry of Trade, Industry and Resource, the first round of maximum prices, effective from midnight on Friday, has been set at 1,724 won ($1.17) per liter for regular gasoline, 1,713 won for automotive diesel, and 1,320 won for kerosene.

These figures are 109 won, 218 won, and 408 won lower, respectively, than the average supply prices submitted by refiners on Wednesday.

Premium gasoline, however, will be excluded from the measure.

The government plans to revise and announce the maximum prices every two weeks, although the adjustment cycle could change depending on movements in oil prices.

According to Bloomberg, Brent crude futures for May delivery on the New York Mercantile Exchange have shown extreme volatility, surging back above the $100 mark after just three days.

Although members of the International Energy Agency (IEA) have confirmed plans for a large-scale release of strategic petroleum reserves, the price of West Texas Intermediate (WTI) crude exceeded $90 per barrel again during intraday trading.

The industry ministry expects that consumers will begin to feel the effect of lower prices at gas stations within two to three days after the official announcement.

Meanwhile, President Lee Jae-myung said during a meeting with his senior aides at the Blue House on Thursday that the government “must not waste the golden time to mitigate the impact on the public’s livelihoods and the broader economy.”

“Efforts such as fuel tax cuts and subsidies for truck drivers, farmers, and fishermen to offset fuel costs should be accelerated,” he said.