10th price cap matches 7th–9th rounds amid concerns over household costs

Won's decline offsets some impact of surging global crude prices

Fuel consumption has fallen despite critics' warnings of overconsumption

Fuel prices are displayed at a gas station in Seoul. [Newsis]
Fuel prices are displayed at a gas station in Seoul. [Newsis]

The government has decided to freeze domestic oil product price caps for another four weeks, prioritizing household cost relief despite a sharp rise in global crude prices.

The Ministry of Trade, Industry and Energy announced Friday that the 10th round of oil price caps, effective from midnight Saturday, would be held at the same levels as the ninth round. Gasoline will remain capped at 1,784 won per liter, diesel at 1,773 won and kerosene at 1,380 won — the same rates that have applied since the seventh round.

The caps have been unchanged since the government cut the ceiling by 150 won per liter in late June, with the same price levels carried through July, August and now into September.

Global oil prices have been volatile this month as fighting between the United States and Iran intensified and Houthi rebels seized areas near the Red Sea. As of Wednesday, Dubai crude stood at $128.0 per barrel, Brent crude at $105.8 and West Texas Intermediate (WTI) at $102.4. International diesel prices also surged, reaching $201 per barrel.

The government nonetheless opted to freeze the caps, citing the burden on ordinary households. The consumer price inflation rate eased from 3.2 percent in June to 2.8 percent in July before climbing back to 3.1 percent last month. At the same time, the won-dollar exchange rate has fallen roughly 10 percent from around 1,505 won in late March to 1,358 won recently, partially cushioning the impact of higher global crude prices.

Some critics have argued that artificially suppressing fuel prices encourages overconsumption, but the government says actual petroleum consumption has declined since the price cap system took effect. Total retail fuel sales at gas stations from the second week of March through August fell 2.1 percent for gasoline and 8.4 percent for diesel compared with the same period a year earlier.


keg@heraldcorp.com