Korea's Oil Price Cap System Under Fire as Gasoline Consumption Hits Record High

The South Korean government's Oil Price Cap System has been in effect for six months, but its long-term effects are becoming increasingly contentious. Despite international oil prices surging past $100 per barrel due to Middle East instability, domestic gasoline prices have remained relatively stable thanks to the policy.

The Ministry of Trade, Industry and Energy is set to announce a new oil price cap on August 18th, but critics argue that extending the system will only increase the burden on taxpayers. The government has been covering refining industry losses with taxpayer money, which will become more costly as time goes on.

A key indicator of the policy's effects is gasoline consumption, which hit a record high in July despite high oil prices. According to the Korea National Oil Corporation, national average gasoline price was 1,882.41 won per liter (approximately $1.4), up 12.9% from the same month last year.

Hwang Gyeong-chul, a driver with 30 years of experience, supports maintaining the price cap system, saying it helps in daily life for people struggling economically. However, experts warn that prolonging the policy will lead to higher costs and market distortions when normalization eventually occurs.