Gas station operators threaten to shut down
By Kim Tae-jong
Debate over oil price reductions is heating up after gas station owners have threatened to go on strike unless the government withdraws its plan to set up more discount gas stations nationwide as part of anti-inflation measures.
The threat came after the government announced Friday it will open more “altteul” (no-frills) gas stations in public parking lots and also allow big discount chain stores to sell fuel in small containers to customers in order to bring down the retail price of petroleum products.
“We will reduce the excessive retail margins and provide consumers with accurate information about price and quality to help them make rational choices,” Finance Minister Bahk Jae-wan said in an anti-inflation meeting of related ministers Friday.
At altteul gas stations, fuel is sold at lower prices than their conventional rivals, with the average price up to 100 won less per liter, because they receive their fuel directly from state-run agencies at cheaper prices.
But gas station owners strongly criticized the government’s anti-inflation drive, arguing it will only worsen their financial difficulties.
“Currently, gas stations average a 4 percent operating margin, which means we cannot lower fuel prices anymore,” said an official from the Korea Gas Station Association (KOSA). “The market is also already saturated and many gas stations have already gone bankrupt.”
According to KOSA, the number of gas stations nationwide stood at 13,003 in the end of 2011 but dropped to 1,2907 as of April, the first decline in history.
Gas station owners will take collective actions including going on strike if the government pushes forward with the plan in order to “survive,” the KOSA official said.
He also criticized the allowance of gasoline sales in small containers at discount stores, arguing it poses a risk to customers’ safety.
Instead of this plan, he suggested the government reform the market dominated by a cartel of four refiners _ SK Energy, GS-Caltex, S-Oil and Hyundai Oilbank.
But the government is maintaining a stern stance on the issue with the aim to convert 10 percent of Korea’s gas stations, or 1,300 outlets, into discount gas stations by 2015.
The Ministry of Knowledge Economy has already arranged a deal for Korea National Oil Corporation and the National Agricultural Cooperative Federation, better known as Nonghyup, to purchase large quantities from the refiners on behalf of discount gas stations.
To diversify the supply channels of petroleum products, the ministry has also allowed Samsung Total to supply 35,000 barrels of gasoline to discount gas stations from July and gradually increase the supply. Previously Samsung Total only exported petroleum products.
As of June 17, there were 554 discount gas stations nationwide including those run by Nonghyup, and the government plans to increase the number to 1,000 by the end of the year.