[News Today] Fuel price cap revived amid soaring costs

[LEAD]
A cap on petroleum prices has now taken effect as the government moves to curb soaring fuel costs. It marks the return of the system for the first time in nearly 30 years since oil price liberalization in 1997.
The cap applies to the prices oil refineries charge gas stations, rather than the retail prices at the pump.

[REPORT]
A cap system on fuel prices took effect at 12 a.m. Friday.

This is putting an upper limit on the price of petroleum products oil refineries supply to gas stations.

It is 1,724 won for gasoline, about a dollar 16 cents per liter. The cap is 1,713 won for diesel and 1,320 won for kerosene.

Gas stations then determine the final sale price by adding respective profit margins.

As it's difficult to unilaterally regulate petro station prices because they differ widely by region and management style, the cap rule targets the supply price.

Koo Yun-cheol / Deputy Prime Minister for Economic Affairs
A fuel price cap is implemented to sternly respond to outrageous price hikes and ease consumer burden.

The first cap will apply for the next two weeks.

It will then be adjusted considering changes to global oil prices and taxation.

In this way, the cap will be renewed every two weeks.

Meanwhile, the oil export volume of refineries will be restricted to the level one year ago.

The new scheme also stipulates the domestic release volume should be over 90% of last year's level.

Losses sustained by oil refineries due to the cap will be compensated by the government.

If fuel prices go down, the cap could be lifted.

Without citing a specific figure, the industry ministry said the condition to lifting the cap is stabilization in fuel prices.

It likely implies the government will comprehensively reflect conditions at home and abroad in that decision.

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