Fuel taxes in Korea cut by 20% Friday to tame inflation

2021.11.12 13:40:52

[Photo by Park Hyung-ki]이미지 확대

[Photo by Park Hyung-ki]

South Korea slashed fuel taxes by 20 percent Friday under its six-month temporary program to tackle inflation from surging oil and commodity prices, but it may take more time for consumers to feel the benefit in neighborhood gas stations.

According to the government, fuel taxes on gasoline was lowered Friday from 820 won ($0.7) per liter to 656 won, on diesel from 582 won to 466 won, and on LPG butane from 204 won to 164 won. The slash is expected to result in a cut in retail prices – gasoline by 164 won per liter, diesel 116 won, and LPG butane 40 won.

A cut in fuel taxes, however, do not necessarily lead to cheaper prices for consumers as the retail price is voluntarily set by individual gas stations.

The government is encouraging suppliers to reflect the fuel tax cut to retail prices. But technically, it will take one to two more weeks before full price reflection because fuel taxes are imposed on the phase of shipment by oil refiners and some fuels already shipped before the tax cut are still in circulation.

이미지 확대
The Korea Oil Station Association said an immediate cut in fuel prices will be unlikely because of remaining stockpiles at gas stations.

The government asked gas stations under direct management of oil refiners and budget stations to lower retail prices immediately, hoping the move from those stations accounting for 19.2 percent of the total to affect others in a race for consumers with cheaper prices.

Oil prices, however, are on a continuous surge, and it remains to be seen whether consumers will actually feel the price change.

According to Opinet, an oil price information website under Korea National Oil Corporation (KNOC), average gasoline prices were up 1 won per liter to 1,810 won as of 5 p.m. Thursday. The price is up 9 won from Nov. 6 and 116 won from Oct. 13.

The average gasoline price reached 1,901 won per liter in Jeju and 1,889 won per liter in Seoul.

By Pulse

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