South Korea to convert 10% of fuel stations into cost-saving stations

South Korea’s energy ministry said that by 2015, the government plans to convert 10% of the country’s 13, 000 fuel stations into cost saving stations that will sell oil products at lower prices. This would ease the long-standing oligopoly of the country’s four refiners and force them to bring down retail prices. The ministry said that state-run Korea National Oil Corp. will buy oil products in bulk from local and foreign refiners. These will be used to supply the cost-saving stations with oil products at below-market prices. The cost-saving stations may be able to sell gasoline 100 won (US$ 0.08) cheaper per liter. The first station will be operational by December and 500 others will be set up next year. The stations will be run by government-backed not-for-profit companies. As part of the ministry’s corporate social responsibility initiative, local companies will also be encouraged to run the low margin, cost-saving stations. High retail fuel prices in South Korea are attributed mainly to the oligopoly structure in the country’s oil industry. The government had been trying to control inflation at 3%, but the soaring international prices of crude oil, grains and commodities had made it impossible for Seoul to meet its goal. In October, the country’s consumer prices grew 3.9% year-on-year. (November 3, 2011)