Effective from Sunday, the extent of oil tax reduction will be expanded from 20% to 30%, which means that consumers will benefit by paying 83 won less per liter. It will take one to two weeks for the price reduction to be reflected across oil pumps nationwide, but the chance of international oil prices rising again may offset the impact of the reduction.
According to the Ministry of Economy and Finance, oil tax reduction will be in effect by the end of July, bringing down gasoline prices and diesel prices by 83 won and 53 won per liter, respectively. The government had reduced oil tax by 20% from Nov. 12 last year when international oil prices soared.
Oil tax reduction had been originally planned to expire on Saturday, but the plan was extended with further reduction when international oil prices exceeded 100 dollars per barrel with Russia’s invasion of Ukraine. The reduction translates into gas budget reduction of 10,000 won per month for a consumer that drives 40 kilometers daily on a gasoline car (with fuel efficiency of 10 kilometers per liter).
Government-operated gas stations and the four major private oil brands will be reflecting the additional reduction on sales prices. According to Opinet, run by the Korea National Oil Corporation, the average price of gasoline sold at gas stations across the nation as of Sunday dropped by 18.55 won to 1,956.22 won per liter. The reduction offset the increase in oil prices, which had been occurring for seven consecutive days. The price reflection for other gas stations will take effect after one or two weeks, as they consume remaining oil stock on hand.
Some say that the offset may not be impactful to consumers if international oil prices rise again. The price of Dubai crude fell briefly under 100 dollars per barrel on April 26 but climbed back to 105.37 dollars on April 29.
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