LPG Price to Fall Despite Nixed Tax Cut

The price of liquefied petroleum gas, or LPG, will decrease more than 300 won (23 U.S. cents) per kilogram in 2009 despite the nixed plan to cut the fuel tax 10 percent.

According to LPG import!ers yesterday, E1 Corp. told LPG stations across the nation that it will cut today the price of propane gas 28.8 percent from 1,267 won (97 cents) to 902 won (69 cents) per kilogram and that of butane gas 21.5 percent from 1,660 won (1.27 U.S. dollars) to 1,303 won (99 cents).

Accordingly, the price of butane gas for vehicles will also fall from 969.44 won (74 cents) to 760.95 won (58 cents) per liter.

SK Gas also cut the price of propane gas from 1,268 won (97 cents) to 906.26 won (69 cents) and the price of butane gas from 1,661 won (1.27 dollars) to 1,307.25 won (one dollar).

The government has canceled its planned fuel tax cut of 10 percent. With domestic gas providers cutting gas prices, however, the price of propane gas will fall to around 1,500 won (1.15 dollars) per kilogram and that for butane gas for vehicles to around 800 won (61 cents) per liter, easing the burden on taxi drivers and the lower-income bracket.

An E1 source said, “We decided to lower the prices of gas to be sold in the nation after considering the recent fall in international gas prices and changes in the foreign exchange rate.”

When Saudi Arabia’s state-oil company Saudi Aramco gives notice of the international LPG price, Korean LPG import!ers set their supply price in Korea after considering import! price, the foreign exchange and tax rates, and distribution cost at the end of every month and implement the price from the first day of the next month.

Despite inflationary pressure, LPG import!ers froze gas prices in February, April, August and November last year to ease consumer burden. They also lowered their gas supply price 100 won (eight cents) per kilogram after reflecting downward factors.

With the oil tax cut canceled, the price of gas sold at service stations in the country will jump 83 won (six cents) per liter and that of diesel will rise around 57 won (four cents).

The retail price of gas Tuesday was 1,287.45 won (98 cents) and that of diesel 1,268.45 won (97 cents) per liter. Accordingly the prices will jump to 1,370 won (1.05 dollars) and 1,320 won (1.01 dollars), respectively.

cha@donga.com