Diesel: 1000 Won Per Liter

A certain Mr. Kim was recently surprised at a gas station in Gangnam because he saw the price of diesel was listed at 1,002 won per liter.

He bought a recreational vehicle (RV) about two years ago, thinking that although the price of the diesel car was slightly more expensive, it would be more economical in the long run since diesel was cheaper than gasoline at that time. The diesel price was 680.690 won per liter then.

Mr. Kim showed his regret, saying, “Diesel prices have been climbing high so far, and I heard that it will go up even more. I think I shouldn’t have bought an expensive car.”

A tax increase by the government and the world oil price hike have made the price of diesel jump. Finally, the “1,000 won per liter” era has arrived.

Among newly registered cars, the proportion of diesel-powered vehicles is showing a steady rise from 48.7 percent in January to 55.3 percent in June. During the same period, gasoline cars’ share dropped from 39.1 percent to 33.2 percent.

Diesel Price Jumped Higher than Gasoline Price—

According to the Korea National Oil Corporation (KNOC), the average gasoline price of 556 gas stations surveyed in the country was 1,322.98 won per liter in January and 1,367.35 won per liter in the third week of July, an increase of 3.3 percent (44.37 won per liter). In the meantime, the average diesel price was up from 829.06 won per liter to 932.92 won, an increase of 12.5 percent (103.86 won per liter).

Even the fact that the government raised the tax on diesel by 58 won per liter is considered, the price increase rate is 5.5 percent (45.86 won) and higher than the gasoline price increase.

KNOC explains, “The number of diesel cars has consistently increased and that has created more demand for diesel. The increased demand has led to a larger increase in the diesel price than that of gasoline.”

In fact, gasoline consumption from January to June this year was 27,570,000 barrels, which was 5.9 percent less than during the same period last year. However, the consumption of diesel for auto vehicle was 53,660,000 barrels, 3.2 percent higher than that of last year.

Oil Companies: “Prices in the international market are very influential”—

Oil companies in Korea, regarding the oil price increase, said, “In terms of the world oil market, the diesel oil price has jumped more than the gasoline price. The increase in the international market directly affects the price of the domestic market.”

According to oil companies, the price of gasoline in the Singapore market was $39.49 per barrel on January 1 and rose to $42.81, an increase of 14.2 percent ($5.32), on July 15. During the same period, the diesel price rose from $34.76 dollars to $43.20 dollars, an increase of 24.3 percent ($8.44), and that has made the domestic price also jump.

Do-Young Kim nirvana1@donga.com