Gas Prices Rise Again... Average Monthly Increase of 2,220 Won per Household

Gas Price Increase for Minsu Next Month... Residential Use Up 7%
General Use Rises 7.2~7.7%... Average Household Monthly Increase of 2,220 KRW
Natural Gas Spot Price Surge... 141% Jump in One Year

An electricity meter is installed at a multi-family house in Seoul on the 27th, when the fuel cost adjustment unit price for the third quarter electricity bill is scheduled to be announced. Photo by Jinhyung Kang aymsdream@

[Asia Economy Sejong=Reporter Lee Jun-hyung] Gas prices will increase starting next month. The average monthly gas bill per household is expected to rise by 2,220 KRW.

The Ministry of Trade, Industry and Energy announced that from the 1st of next month, residential and general-use city gas prices will increase by 1.11 KRW per megajoule (MJ). This is the sum of the settlement unit price (0.67 KRW) confirmed after the government revised the 'Natural Gas Supply Regulations' last December and the increase in the standard raw material cost (0.44 KRW).

With this increase, residential gas prices will rise from 15.88 KRW per MJ to 16.99 KRW, a 7% increase. General-use gas prices will increase from 7.2% to 7.7%. The Ministry expects that the average monthly gas bill per household in Seoul will increase from 31,760 KRW to 33,980 KRW, a rise of 2,220 KRW.

An electricity meter is installed at a commercial building in Seoul on the 27th, when the fuel cost adjustment rate for electricity bills in the third quarter is scheduled to be announced. Photo by Jinhyung Kang aymsdream@

The government maintains that further gas price hikes are unavoidable. This is due to the sharp rise in international oil prices and natural gas spot prices since the second half of last year, along with a soaring exchange rate. In fact, city gas prices are calculated based on the import price of liquefied natural gas (LNG). According to the Ministry, international oil prices and natural gas spot prices, which affect LNG import prices, have surged by 61% and 141% respectively over the past year. During the same period, the exchange rate increased by 14%.

The government's decision to minimize city gas price increases since July 2020 to stabilize people’s livelihoods has also contributed to the rising unpaid balances at the Korea Gas Corporation. Unpaid balances refer to the amount of LNG import costs that have not been recovered through gas charges. The unpaid balance for residential gas charges increased from 1.8 trillion KRW at the end of last year to 4.5 trillion KRW in the first quarter of this year. This means the unpaid balance nearly increased by 1.5 times in just one quarter.

An official from the Ministry of Trade, Industry and Energy said, “With international oil prices, natural gas spot prices, and exchange rates all rising simultaneously, the price increase is inevitable. However, we have adjusted it to the minimum level considering the inflationary impact.”