Gasoline Prices Expected to Fall

The price of gasoline is expected to fall by 12 won per liter from Friday.

The Ministry of Finance and Economy (MOFE) and the Ministry of Commerce, Industry and Energy (MOCIE) announced on Wednesday that they will administer a tariff quota from April 30 to respond to surging international oil prices. The tariff rate of crude oil will fall to one percent from the current three percent, and the import charge will fall from 14 won per liter to 8 won per liter.

Accordingly, a factory price fixed by oil refiners is likely to fall by 11 to 12 won per liter. The price of petroleum products, such as direct imports of gasoline and diesel oil, will go down.

The tariff cut was made based on a measure that lowers the tariff rate and import charge when the average price of Dubai oil rises above $32 per barrel for 10 days.

Korea National Oil Corporation said that the price of Dubai oil on Tuesday rose $0.39 to close at $32.73, the record high in 41 months. The average price for recent 10 days stood at $32.17.

The government is planning to restrain the rising price of petroleum products by additionally lowering internal taxes, such as traffic tax, if oil prices keep rising.

“With this measure, the factory price will fall from midnight on April 30, but it will take time for the price fall to be reflected at gas stations,” said Yeom Myeong-cheon, director at the MOCIE. “We will strive for the government policy to be effective as soon as possible through cooperation with related parties.”

Meanwhile, MOFE decided to lower the tariff rate of four raw materials—coking coal, ferrosilicon, ferrosilicon manganese, and cobalt powder--by one to four percentage points.

The tariff cut on crude oil and petroleum products will be effective until an official announcement is made. The tariff cut on raw material will be applied to goods imported from April 30 to December 31.

Ki-Jeong Ko koh@donga.com