Reduction in Gasoline Tax Cut Narrowed on New Year's Day... Slight Increase in Selling Price

Average Increase of 7 Won per Liter on First Day... Differences Among Gas Stations Due to Inventory Depletion

Due to the decline in international oil prices, the average gasoline selling price at domestic gas stations has dropped to the 1,500 KRW per liter range for the first time in a year and a half. On the 11th, gasoline was sold at 1,497 KRW per liter at a gas station in Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Heeyoon] On the first day of the reduction in the gasoline fuel tax cut rate on the 1st, gasoline prices at domestic gas stations slightly increased compared to the previous day.

According to the Korea National Oil Corporation's oil price information service OPINET, as of 5 p.m. that day, the nationwide average gasoline price was 1,541.67 KRW per liter, up 10.97 KRW from the previous day.

The region with the largest increase in gasoline prices compared to the previous day on the 1st was Daejeon (up 22.68 KRW, average 1,545.17 KRW), and the smallest increase was in Sejong (up 4.46 KRW, average 1,530.00 KRW). The average gasoline price in Seoul, where gasoline is sold at the highest price nationwide, rose by 20.36 KRW to 1,636.47 KRW per liter.

Domestic gasoline prices had fallen for 16 consecutive weeks until last week due to the impact of declining international oil prices.

The government reduced the fuel tax cut rate applied when purchasing gasoline from the previous 37% to 25% starting that day. The gasoline fuel tax increased by 99 KRW from 516 KRW to 615 KRW per liter.

This means that prices could rise by about 100 KRW per liter due to the increase in fuel tax. However, compared to the pre-tax cut elastic tax rate (820 KRW per liter), it is 205 KRW lower per liter.

The government maintained the existing 37% fuel tax cut, the largest reduction ever, for diesel, which still has a high price level.

Accordingly, the nationwide average diesel price continued its recent downward trend, falling by 0.81 KRW to 1,720.95 KRW per liter compared to the previous day. Diesel prices had fallen for six consecutive weeks until last week.

The government stated, "Considering that domestic gasoline prices are stable compared to diesel and other fuel types, the fuel tax cut rate was partially reduced."

The government originally planned to extend the fuel tax cut, which was scheduled to end at the end of last year, for four months until the end of April this year, but decided to apply different tax rates for each fuel type during this period.