South Korea raised its government-imposed caps on wholesale fuel prices, underscoring mounting pressure on energy costs even as authorities try to shield consumers.
The Ministry of Trade, Industry and Energy set a second round of maximum wholesale prices, effective at 12:00 a.m. for two weeks, at $5.53 per gallon for gasoline, $5.50 per gallon for diesel used in vehicles and ships, and $4.38 per gallon for kerosene. Each cap was lifted by about $0.60 per gallon from the first round.
The ceilings are calculated by applying global price changes to the previous cap and adding taxes. The latest adjustment reflects the impact of the U.S.-Iran conflict, which has pushed international oil prices higher.
Despite the increase, officials said retail prices are likely to remain in the low-$5-per-gallon range. During the first round of controls, pump prices settled modestly above the cap, suggesting only partial pass-through to consumers.
Authorities warned gas stations not to raise prices prematurely, noting that most hold five days to two weeks of inventory purchased under the earlier, lower cap. “Any immediate price increases on March 27 or 28 would raise concerns,” an industry official said.
Still, early signs of price increases have emerged. Market data showed hundreds of stations had already raised prices as of early March 26 compared with levels shortly after the first cap took effect. National average prices, which had been declining, began edging higher again for gasoline on March 25 and diesel on March 26.
Analysts say expectations of the higher second-round cap may have been priced in, raising questions about the policy’s effectiveness.
Some in the industry say price adjustments reflect unsold inventory or operating pressures. Officials counter that raising prices on fuel purchased under the previous cap is difficult to justify.
Critics argue the caps have had a limited effect. Compared with pre-policy wholesale prices, gasoline and diesel costs fell by about $0.30 and $0.60 per gallon, respectively, but retail declines were smaller.
There are also concerns that suppressing prices could encourage consumption at a time when conservation is needed.
The government maintains the policy has helped cushion consumers from sharp increases, estimating it lowered prices by roughly $0.50 to $1.25 per gallon and eased the burden on households and the broader economy.
