Budget Gas Stations in Name Only? ... Up to 66 Won per Liter More Expensive Than Regular Stations

Rep. Park Heeseung conducts sample survey of real-time prices on Opinet
Price reversals found in nine cities and provinces nationwide
"Maintaining price competitiveness is all the more important when oil prices surge"

Amid high oil prices, consumers looking for cheaper fuel at budget gas stations may instead end up paying more than they would at regular gas stations.

On average, budget gas stations have lower prices. However, a sample survey comparing actual pump prices found that prices at budget gas stations were as much as 66 won per liter higher in some regions.

Rep. Park Heeseung of the Democratic Party of Korea (Namwon, Jangsu, Imsil and Sunchang).

On October 10, Rep. Park Heeseung of the Democratic Party of Korea (Namwon, Jangsu, Imsil and Sunchang) said that a review of real-time gasoline prices on Opinet, an oil price information service operated by the Korea National Oil Corporation, found that budget gas stations were more expensive than regular gas stations in some regions.

Budget gas stations were introduced in 2011, when oil prices were high, to stabilize fuel prices. The aim is to reduce consumers' fuel costs by supplying petroleum products at lower prices than regular gas stations. According to average price statistics, as of August, gasoline at budget gas stations was about 38 won per liter cheaper than at regular gas stations.

However, a sample survey by Rep. Park's office, which selected one city or county in each of nine metropolitan and provincial governments, produced different results.

The survey found that gasoline at budget gas stations on expressways was 66 won per liter more expensive than at regular gas stations in North Gyeongsang Province; in Gangwon Province, it was 59 won more expensive; in South Gyeongsang Province, 48 won more expensive; and in North Chungcheong Province, 45 won more expensive. Cases in which budget gas stations charged more than regular gas stations were also found in Gyeonggi Province, Gwangju and South Jeolla Province, North Jeolla Province, South Chungcheong Province, and Jeju.

As this was a sample survey comparing gas station prices in specific places at a specific point in time, it may not represent the price levels at budget gas stations nationwide. However, the findings show that average prices alone do not fully explain the price differences consumers experience when they actually fill up.

Differences in when gas stations purchased fuel and how quickly they depleted their inventories may have contributed to the price reversals. Even when international oil prices rise sharply, retail prices can differ because gas stations vary in the inventory they had already secured and when they adjust their selling prices.

For consumers, however, the price displayed when they fill up is a more direct basis for their decision than the reasons behind the price difference. Critics say the policy's purpose could be undermined if consumers who visit a station trusting its “budget” label end up buying fuel that costs more than at a regular gas station.

Rep. Park also pointed to the financial burden on the Korea National Oil Corporation, which supplies petroleum products to budget gas stations. Because there are limits to absorbing losses to maintain price competitiveness, he said, the supply prices and support system should be reviewed together rather than relying solely on the burden borne by a public institution.

Rep. Park stressed that the government should review its response to oil prices alongside its budget gas station policy, as uncertainty in international energy supply chains has grown amid worsening tensions in the Middle East and around the Strait of Hormuz.

Just as the government responded to rising domestic fuel prices by implementing a price ceiling system for petroleum products, it should also develop policy measures to ensure consumers actually experience lower prices at budget gas stations, he said. He added, however, that the effects of the price ceiling system and the price competitiveness of budget gas stations should be examined separately.

“People who go to budget gas stations because they are worried about fuel prices should not have to leave after filling up with more expensive fuel,” Rep. Park said, urging the government to improve the system.

This content was produced with the assistance of AI translation services.