Fair Trade Commission Urges Oil Market Deregulation

The Fair Trade Commission yesterday urged deregulation of the domestic oil refinery market to raise competition, saying the sector is monopolized by four companies.

The recommendation came after President Lee Myung-bak ordered the commission to review why oil prices are rising despite many factors pointing a price decrease at an emergency economy meeting last week.

According to a report on the oil industry and its competition published by the commission, SK Energy, GS Caltex, Hyundai Oil Bank and S Oil control 98.5 percent of the domestic market. The report also urged constant monitoring of prices and transaction conditions to induce competition among companies.

The report said certain factors in distribution prevent competition. In December last year, the government lowered the mandatory storage volume for a new oil importer from 60 days or 10,000 kiloliters to 45 days or 7,500 kiloliters.

The commission, however, said the mandatory volume can still act as an entry barrier.

lovesong@donga.com