High Diesel Prices Hit Merchants
By Kim Hyun-cheol
Staff Reporter
To Kim Jung-tae, every day is a struggle for survival these days.
The 48-year-old sells vegetables using his small truck, driving alley after alley in Seoul's Seodaemun-gu area but the money he is earning lately falls short of what he needs to make both ends meet.
``I've been doing this job for over 15 years and it's never been this tough before,'' the vegetable-monger says. ``My profit got more than halved because I have to spend so much on fuel for my truck.''
No one here is free from the recent influence of overly high oil prices, and it's especially painful for the self-employed like Kim, who has to make money on a daily basis. Things are going worse for them as diesel prices are set to surpass those of petrol.
The average diesel price nationwide was 1,785.23 won ($1.72) per liter last week, only 31.75 won lower than gasoline. The gap narrowed by almost 50 won from a month earlier.
Soon a reverse in price is likely to take place as local refineries set a higher price tag on diesel by 5-30 won per liter last week. Diesel is already selling higher than gasoline in 29 percent of gas stations nationwide, according to Opinet, a Web site offering information on prices at gas stations across the country, Wednesday.
The government set the diesel price to 85-percent level of gasoline last year.
Turbulent global oil prices dealt a severe blow to the governmental efforts, also causing a huge problem for local customers. The current price-setting system by refineries is also affected as they link local product prices to those on the global oil spot market.
The biggest problem right now is the upward spiral of diesel prices doesn't seem to be slowing down. On the global market, diesel prices surpassed those of gasoline around last summer and the gap is widening as demand keeps increasing in emerging industrial countries such as China and India.
``The global rise in diesel prices is simply beyond the level locally controlled by tax,'' according to the Korea Energy Economics Institute.
The situation raises concerns of the possibility of another nationwide strike from cargo truck drivers.
Last week, the Korean Transport Workers' Union (KTWU) threatened to go on strike next month unless the government comes out with countermeasures to help ease their hardship.
The union went on strike in 2003 and 2006, asking for improved freight-operating systems and better working conditions.
A cargo driver is paid 800,000 won ($770) for a round-trip between Seoul and Busan currently, but now the charge is not profitable as drivers spend nearly 600,000 won on diesel for the trip, the union says.
The government discussed a series of measures at a ministers meeting on Wednesday including a subsidy extension.
Cargo truck drivers currently receive a 287-won per liter subsidy for diesel they consume at work. Without the extension, the policy will expire next month.
The union, however, is negative on the effects of the measure, saying that cannot be a permanent solution and the money falls well short of recent increases in diesel prices.
``The subsidies come from the driving tax, and it means the government is doing nothing but burdening the common people with its policy failure,'' a KTWU official said.