Oil refiners protest regulatory move for detailed price disclosure

[Photo by MK DB]

Korean oil companies are protesting the government’s plan that they should disclose the unit price and quantity of gasoline and diesel supply to each region, calling it an infringement of trade secrets. The local oil refining industry has disclosed only the average unit price nationwide.

The government is seeking mandatory price disclosure and tighter monitoring to control oil prices, whose high prices have imposed a burden on household budget. As a countermeasure, the government cut fuel tax three times last year and this year, but there were little changes to the final consumer price. Government policy makers have suspicions that oil refiners or gas station operators have pocketed the benefit from fuel tax reductions.

The government’s enforcement decree, which contains the detailed price disclosure, already passed a decree review committee and is pending for final review at the Prime Minister’s Office before implementation.

Oil refiners are concerned that disclosing selling prices region by region will dampen their business activities because it is impossible to achieve reasonable price differentiation at dealerships or gas stations.

Even the United States protects oil refiners’ regional delivery price as a trade secret, but South Korea is forcibly trying to disclose it, said an official in the oil refinery industry, adding that it takes up to two weeks for each refinery to actually reach consumers after product rollout and this regulation is excessive.

The official also pointed out that each oil refiner records the factory price as part of sales data for each date and submits it to tax authorities, which can tell whether they reflect fuel tax reductions in the consumer price.

Back in September 2011, the energy ministry tried to tighten price disclosure with a similar measure, but the plan was canceled by the Prime Minister’s Office due to concerns over the infringement of trade secrets. There are also concerns that the new decree could increase the risk of price collusion between competitors.