“War on inflation” is multi-faceted in South Korea

Lee Myung-bak, president of South Korea recently announced a “war on inflation.”  The government announced a variety of approaches to work on curbing inflation, including reducing import tariffs, selling off stockpiles of agricultural products and freezing electricity and gas prices. The government also urged both local oil refiners and mobile operators to cut their prices. The top four crude refiners in South Korea, SK Innovation, GS Caltex, S-Oil and Hyundai Oilbank, responded with cuts in both gasoline and diesel prices beginning in April.  However the government has found that the oil refiners are quick to increase prices when global crude oil prices rose but were slow to lower prices when they went down.  A joint panel has been set up by the government to look at ways to stabilize oil prices. The panel found that the oil refinery business in South Korea is monopolized by the four major refiners and that there is little competition between the four.  South Korea’s anti-trust watchdog ordered the four companies to pay combined fines of 434.8 billion won (US$403.4 million). (June 3, 2011)