Seoul Gasoline Prices Enter 1400-Won Era

Jin Sung-hoon needs to drive long distances for business but he fears going to the gas station. That is because he has to pay 280 thousand won per month on gas now, compared to the last October’s 250 thousand won. He has to spend 360 thousand won more annually on gasoline.

“On top of the inflation, the oil prices are skyrocketing and driving itself has become a financial burden,” Jin says, adding that he will use mass transportation to save oil expenses whenever possible and try to avoid accelerating.

With a surge in international oil prices, gasoline and light oil prices sold in Seoul have hit a record high.

The Korean National Oil Corporation (KNOC) has done research on fuel prices at 556 gas stations all around Korea and found that gasoline prices averaged 1403.66 per liter, up 10.27 from last week while light oil prices averaged 900.58 won, up 3.86.

It was first time ever in Seoul for gasoline and light oil prices to surpass 1,400 won and 900 won respectively.

Gasoline prices on Jeju island, an infamous place for expensive oil prices, also climbed 13.50 won to 1414.13 while light oil gained 10.62 won, ending at 929 won. This marks the highest level of oil prices since March of last year, just before the Iraq war.

Gasoline prices in Incheon and Kyonggi provinces are also expected to reach the 1400 won level.

International oil prices have been surging since the Organization of Petroleum Exporting Countries decided last month to cut their oil output. Also adding to the rallying of oil prices is last week’s terrorist attack in Spain which accompanied worries on unstable oil supplies.

West Texas Intermediate (WTI) crude for April delivery was traded at 27.44 dollars on the New York Mercantile Exchange on Monday, up 1.25 dollars (3.5 percent) from last weekend and its highest price since March 8 of last year.

Brent North Sea crude for April delivery also rose 1.56 dollars (4.8 percent), trading at 33.80 dollars on the International Petroleum Exchange of London.

The 20-day moving average spot price for Middle East Dubai crude also hit 30.01 dollars, breaking the 30 dollar mark since the pre-Iraq war period.

Ku Ja-kwon, a team leader in overseas research for KNOC said, “The oil prices will show a steady decrease in the second quarter (April to June) because it will be the off season, but when another terror attack takes place, and if a decision by the OPEC to curtail the oil supplies will be actually put into effect, then it is highly likely that the increase oil prices will keep steady for long time.” Meanwhile, Venezuela’s Energy Minister Rafael Ramirez said after the OPEC conference in Cairo, Egypt on Monday that “the members of OPEC plan on slashing oil production by 100 million barrels per day” and confirmed its strict policy of oil reduction.

Ki-Jeong Ko Dong-Won Kim koh@donga.com daviskim@donga.com