By Kim Tae-gyu
The prices of unleaded gasoline have continued to rise over the past two weeks to approach the unprecedented plateau of 2,000 won ($1.83) per liter. This financially burdens motorists.
Early last October gasoline prices fluctuated to near the 1,700 won level but they started shooting up thereafter to break the 32-month long record on March 17 at 1,951.28 won a litter.
They hit 1,970.7 won over the weekend, are expected to rise further because international crude keeps appreciating.
Yet domestic drivers are struggling to understand why the gasoline prices have already nudged past those of midway through 2008 when crude sold at more than $145 a barrel. By contrast, its present price tag is somewhere around $110.
In response refineries are pointing their fingers to the foreign exchange rates and tax cuts.
``In the summer of 2008, the won-dollar exchange rates were around 1,050 won but it is currently in the vicinity of 1,100 won. The weak won is partially responsible for the higher cost of crude oil,’’ said an official at a local oil company.
``In addition, the government cut tax on gasoline by more than 30 won per liter in 2008. But we do not have that scheme in place, which accounts for today’s high gasoline prices.’’
Refineries claim that Korean prices are still far lower than other countries. According to the Korea National Oil Corp., the country’s high-quality gasoline price is the fifth lowest out of 22 advanced economies.
Only four countries of Canada, Poland, Luxembourg and Spain sold gasoline cheaper than Korea as of the fourth week of last month. In Greece the value is up to 25 percent more than Korea.
But consumers are not accepting the explanation.
``The crude oil price is approximately 30 percent lower right away compared to the peak of 2008 while back then the foreign exchange rate was some 5 percent higher,’’ a Seoul citizen said.
``The difference in tax between the two periods is merely 30 won per liter. Then, how does the 30-percent gap of crude prices and the 5-percent disparity of the exchange rates cancel each other out?’’
Worse for car owners here, they are expected to pay more in order to run their vehicles for the time being since the Korean won is appreciating against the greenback.
The Seoul administration does not have any immediate plan to trim taxes on oil products unlike in 2008 when it brought in such a policy in March, which continued through December.
With no proven domestic reserves, Korea does not produce a drop of oil and most of the demand of the world’s fifth-largest crude importer is met by shipments from oil-rich Gulf countries such as the United Arab Emirates.