SEJONG, Nov. 29 (Korea Bizwire) – Discount gas stations have had little to no impact on overall gas prices since they were introduced about five years ago, a report showed Monday.
The country’s state-run Korea National Oil Corp. (KNOC) introduced the discount gas stations in late 2011 to sell car fuel at cheaper prices as part of efforts to curb inflation and to promote competition.
Discount gas stations sell gasoline at prices around 2 percent lower than typical gas stations as they receive the fuel directly from KNOC.
According to the report by Hong Woo-hyeong, a researcher at the Korea Institute of Public Finance, out of 3,787 traditional gas stations in Seoul and its neighboring areas, 187 stations were switched into discount gas stations.
When a typical gas station switched, retail gas prices of the discount stations fell by between 22 won (US1.8 cent) and 23 won per liter.
About 10 months after the switch, retail gas prices at the discount station fell by between 15 won and 17 won, the report showed.
In contrast, retail gas prices at normal gas stations near the discount stations changed little or not at all, the report said.
Hong said the government’s policy of encouraging gas stations to cut prices throughout the introduction of discount stations failed because the retail gas market had already become “over-saturated.”
Typical gas stations have been unable to cut prices because retailing margins are too low, the report said.