OIL PRICES

[Anchor Lead]

Recently rising oil prices at the pump are due to a hike in international oil prices. Oil prices have gone higher starting today, as the government will gradually cancel the temporary cut in fuel taxes. Here are the details.

[Pkg]

With a decreased cut in fuel taxes, gasoline prices will rise by 65 won per liter, diesel by 64 won and LPG prices by 16. The increases are slightly more than half of the cuts made last November. At the news of increasing oil prices, drivers flock to gas stations to fuel up their cars. Fuel prices have been rising since February due to hikes in international oil prices. The decreased cut in fuel surcharges will drive gasoline prices up some 200 won per liter within three months.

[Soundbite] CHOI DONG-HO(SEOUL) : "It just keeps rising. Recently, there was quite a large increase. I heard there will be another hike."

There are concerns over economic repercussions from rising oil prices. The government will cancel the reduction in fuel surcharges over two occasions in order to minimize the measure's economic impact. Despite the zero-point inflation rate, surging oil prices will discourage private consumption and corporate investment when the economic recovery trend is not solid enough.

[Soundbite] CHO YOUNG-MOO(LG ECONOMIC RESEARCH INSTITUTE) : "Small and mid-sized business owners will feel a greater burden. The rise will also discourage corporate investment and household consumption and have negative effects on the economy."

Civic organizations are pledging to closely monitor if gas stations move to raise prices drastically, as they were slow to lower oil prices when fuel surcharges were reduced. The government, on its part, will strengthen crackdowns on unfair market practices like hoarding.