SK Energy announces overhaul of supply pricing system

Shift from post-settlement to advance notice and immediate settlement

Diesel prices at SK stations to be discounted for up to one month

Move watched as potential catalyst for industry-wide consumer trust

Company also accelerates energy security drive to cut Middle East oil reliance

An SK Energy-operated gas station in Seoul. [Yonhap]
An SK Energy-operated gas station in Seoul. [Yonhap]

Amid heightened public concern over fuel prices driven by global energy supply disruptions and elevated oil prices, SK Energy on Sunday became the first company in the industry to unveil a new pricing policy centered on abolishing the post-settlement system and introducing weekly advance notice of supply prices. The move comes as consumers have long complained about the so-called "rockets and feathers" effect — where pump prices rise quickly when crude oil prices climb but fall only slowly when they drop — and is being closely watched as a potential turning point for market stability and the restoration of consumer trust.

Advance supply price notice brings transparency to opaque pricing

Refiners and gas stations have long maintained a post-settlement pricing system, under which the final price for petroleum products is determined after delivery based on prevailing market conditions, citing the high volatility of international crude and product prices. The approach reflected the difficulty of locking in prices at the point of supply given the nature of the market. However, as domestic pump prices climbed sharply in recent months, calls grew for refiners to announce supply prices in advance so that the market and consumers could better understand how prices are set.

In response, SK Energy said it would introduce a new policy providing clear pricing benchmarks to its distribution network once the government's petroleum price cap program ends. The core of the reform is a shift to weekly advance notice of supply prices — calculated using key variables including the international petroleum product price index (MOPS) and exchange rates — and a move from next-month settlement to immediate weekly settlement. Transaction terms, which had previously varied from station to station, will also be standardized. The changes are expected to allow gas stations to forecast their purchase prices and, ultimately, to keep consumer prices within a predictable range.

Alongside the pricing overhaul, SK Energy will roll out immediate relief measures for consumers. Starting Tuesday and running for up to one month until the petroleum price cap ends, the company will discount diesel prices by 50 won per liter at SK gas stations nationwide. Its 73 company-operated stations will lower prices immediately, while independently operated stations will receive subsidy payments designed to deliver an equivalent price reduction.

The discount is expected to significantly ease fuel costs for small business operators — including truck drivers, delivery vehicle operators and light truck owners — who rely heavily on diesel for their livelihoods. SK Energy had earlier announced it would pay up to 20 billion won ($13 million) per month in "high oil price and crisis relief subsidies" to support SK gas station operators across its distribution network struggling amid elevated oil prices.

Taking on geopolitical risk head-on: Middle East oil reliance to be cut to 50%

SK Energy is also accelerating structural reforms to strengthen energy security. Amid recurring instability in the Middle East, the company has set a target to reduce its reliance on Middle Eastern crude from roughly 70 percent to 50 percent through expanded sourcing and investment in diversification infrastructure. By broadening the range of import regions and crude grades, the company aims to improve its resilience against geopolitical risks such as a closure of the Strait of Hormuz and build a more stable supply base.

The moves represent a proactive response to the government's policy priorities — including market order, public welfare and energy security — as well as to growing societal expectations of the refining industry amid high oil prices. They also follow up on a cooperation agreement between refiners and gas stations brokered in the National Assembly in April, with the participation of related ministries including the Ministry of Trade, Industry and Energy and the Korea Fair Trade Commission, in the wake of the Middle East war.

Industry observers say the significance of these preemptive steps lies not only in their price-cutting effect but also in the fact that they restructure the very mechanism of price determination to be more transparent and predictable — directly addressing the public's demands of the refining sector. With societal pressure on the industry intensifying amid high oil prices, attention is now focused on whether the moves will spread into a broader industry-wide push for greater pricing transparency and the recovery of consumer trust.

"As a responsible energy company, SK Energy will continue to earn the trust of our customers and the market through a range of efforts — including improving our supply price determination structure, supporting the stability of people's daily lives, and diversifying our crude oil sourcing," SK Energy President Kim Jong-hwa said.


keg@heraldcorp.com