South Korea Extends Fuel Price Caps Amid Oil Surge

The Government of South Korea is extending fuel-price caps for petrol and diesel to shield households from global oil prices that have surpassed 100 US dollars per barrel. These measures were first implemented in March following United States attacks on Iran and are now being maintained to cushion citizens during the Chuseok holiday beginning September 24.

To sustain these caps, the government is utilizing subsidies to compensate refiners for their losses. The state allocated 4.2 trillion won for the first six months of the program and has provided an additional 1.5 trillion won for the current extension. The Ministry of Trade, Industry and Energy maintained the caps on September 18 to combat inflation and rising cost-of-living pressures.

President Lee Jae Myung stated that the administration will continue to use import diversification and export controls to stabilize prices. However, refiners have reported that they have not yet received the promised compensation. Economists warn that the policy distorts the market, reduces incentives for energy conservation, and places significant strain on public finances.