DIESEL OUTPRICES GASOLINE

[Anchor Lead]

Diesel, the main fuel for trucks and construction equipment, has outpriced gasoline for the first time since 2008. Evidently, gasoline benefitted more from rising international diesel costs and lower fuel tax.

[Pkg]

At this gas station in Seoul... diesel costs 1,879 won per liter... 10 won higher than gasoline.

[Soundbite] Park Seung-hwan(Truck Owner) : "Prices at other places are 100 won higher. You mean the diesel price? Yes."

As of yesterday afternoon, the average diesel price nationwide stood at 1,947.59 won per liter, 1.48 won more expensive than gasoline. The price of gasoline went up two won from the previous day while that of diesel increased by six won in a single day, reversing their price order. This is the first time in 14 years that diesel outpriced gasoline, driven by higher international diesel prices. Europe relies on Russia for 60% of its diesel import, but Russia’s ongoing invasion of Ukraine has caused diesel supply disruptions. The government’s fuel tax reduction has also overturned the prices. Fuel taxes were lowered 30% starting this month. But while the tax on gasoline was cut 247 won, that on diesel fell only by 174 won.

[Soundbite] Jo Sang-beom(Korea Petroleum Association) : "Gasoline tax was lowered more than Diesel tax, narrowing the price gap."

Truck drivers and construction equipment owners who use diesel fuel inevitably have to bear higher costs.

[Soundbite] Jang Cheol-ki(Truck Driver) : "If I used to spend KRW 1 mn, I spend KRW 0.6 mn more on fuel. It’s a double whammy because the fuel subsidy has fallen while the oil prices have gone up."

The government started paying out this month a subsidy tagged to fuel cost, to be covered for the next three months. It appears that diesel would continue to cost more than gasoline for some time.