“Government Measures and Falling Oil Prices Lead to Decrease in Domestic Gasoline and Diesel Prices”

[시사저널e=유주엽 기자] While international oil prices have fallen significantly compared to last year, the government’s measures to cut oil taxes have continued, leading to a downward trend in domestic gasoline and diesel prices. The fuel cost burden is decreasing amid high inflation and high interest rates.

According to Korea National Oil Corporation Opinet on the 27th, the sales price of gasoline and diesel in the fourth week of May recorded 1609.5 won and 1439.0 won per liter, respectively. 17.8 won and 29.7 won per liter, respectively, compared to the previous week. Gasoline and diesel prices continued to decline for the fourth week in a row and for the fifth week in a row.

Falling international oil prices have had an impact on the decline in gasoline and diesel prices. As of the 26th, the world’s three major crude oil prices per barrel were $75.33 for Dubai oil, $76.95 for Brent oil, and $72.67 for West Texas Oil. Compared to the same period last year, ▲Dubai crude USD 109.19 ▲Brent crude USD 114.03 ▲West Texas crude USD 110.33, crude oil prices all decreased significantly.

In addition, the government’s oil tax cuts are also having an impact. The government is applying 25% and 37% reductions in oil tax for gasoline and diesel, respectively. The oil tax cut rate was originally planned to be applied until last April, but it was extended for another four months until August 31.

The recent decline in gasoline and diesel prices following the trend of high inflation and high interest rates is relieving the burden of fuel costs for the people. According to the National Statistical Office, the consumer price index in Korea in April was 110.80, up 3.7% from the same month last year. Compared to the 6.3% increase recorded in July last year, the extent of inflation has eased, but the high inflation trend is still continuing. The current interest rate is 3.50%.

Earlier, electricity and gas rates also increased. On the 16th, the government announced an increase in electricity rates by 1.04 won per kW and gas rates by 1.04 won per 1 MJ. The price index for electricity, gas and other fuels in the first quarter of this year was 135.49, up 30.5% from the previous year. This is the highest rate of increase since the first quarter of 1998 (41.2%) during the IMF financial crisis.

Meanwhile, sales of electric vehicles are steadily increasing despite the burden of fuel costs. According to Kaizuyu statistics data, electric vehicle sales in the first quarter of this year were 34,186 units, up 22.7% from 27,853 units in the same period last year.

During the same period, gasoline and diesel vehicles sold 241,742 units and 30,536 units, respectively. Sales of gasoline vehicles increased by 25.2% compared to 193,085 units in the same period last year, but sales of diesel vehicles decreased by 64.4% compared to 85,728 units.