Proposal to Establish a Petroleum Distribution Industry Development Fund
Introduction of a Fair Management System for Affordable Gas Stations
The Korea Petroleum Distribution Association and the Korea Gas Station Association announced on July 31 that they have officially submitted a proposal to the Ministry of Trade, Industry and Energy, calling for improvements to the Affordable Gas Station policy, which has intensified management difficulties at gas stations due to excessive price competition, as well as the establishment of a management system and stronger enforcement measures to eradicate illegal distribution by affordable gas stations.
The two associations criticized the Korea National Oil Corporation's practice of distributing profits from the affordable gas station business as incentives to self-operated affordable gas stations, which account for only about 4% (approximately 400) of the total 10,600 gas stations, calling it preferential support. They argued, "These profits should be used to create a Petroleum Distribution Industry Development Fund (tentative name), which should be utilized for gas station innovation, business diversification, support for full closure, eco-friendly energy transition, and support for gas stations in under-served areas (regions with very few gas stations)."
They further stated, "The absence of a management and operation system for affordable gas stations has led to an increase in illegal distribution and fraudulent activities, which in turn has exacerbated management difficulties for existing gas stations and increased consumer harm." They emphasized that "urgent institutional improvements are needed to establish order in petroleum distribution and ensure the sustainable development of the gas station industry."
According to the two associations, there have recently been numerous reports of violations of the Petroleum Business Act, such as changes in delivery destinations by self-transport vehicles, particularly at low-price affordable gas stations. In some cases, affordable gas stations have exploited the fact that Opinet price information is broadcast six times a day at fixed intervals by reporting low prices during hours with fewer customers and high prices during peak hours. They claim that such practices distort market prices, mislead consumers, and lead to fraudulent receipt of incentives by affordable gas stations, making improvements to related systems and stronger management urgently necessary.
The two associations stated, "Recently, the intensification of low-price competition has led to an increase in gas station closures, and insufficient management and supervision of affordable gas stations is distorting the petroleum market." They added, "We request the government's active consideration and adoption of our proposal to create a fair competitive environment and contribute to consumer protection and energy security."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
