'People's Fuel' Diesel Reverses Petrol Prices, Huge Wave Announced

*This content was translated by AI.

On the 8th, Opinet's oil price as of today was 1,93 won nationwide, surpassing 1,892 won for gasoline. The so-called "price reversal," in which diesel, which has been called "common fuel" for the past few decades and has maintained a lower price than gasoline, has become entrenched, causing huge repercussions in the domestic energy market and logistics industry.

Normally, domestic oil prices were usually kept around 200 won per liter low thanks to a taxation system that imposes higher taxes on gasoline, but the formula was completely destroyed due to international supply chain disruptions and geopolitical crises.

The most direct cause of this phenomenon is the imbalance in global energy supply and demand due to the prolonged war between Russia and Ukraine. Europe has traditionally been a region with a very high proportion of diesel cars and industrial equipment, and diesel consumption is overwhelming, and much of its diesel imports have been dependent on Russia. However, an embargo on Russian oil products since the outbreak of the war has left diesel stocks in Europe bottomed out, which soon led to a global surge in spot diesel prices. As the price of diesel products is higher than the price of gasoline in the international market, the cost burden of the domestic oil industry, which imports, refines, or sells them, is immediately reflected.

In addition, the explosion of alternative demand due to the winter energy crisis also fueled the reversal. As natural gas prices soared, Europe and North America began choosing diesel as fuel to run generators or heating systems instead of gas, resulting in a "double dip" phenomenon in which industrial and heating demands overlap. Gasoline is mainly consumed only by passenger cars, while diesel is widely used in trucks, construction machinery, ships, agricultural machinery, and power generation facilities, so demand elasticity is much lower during the economic recovery and energy crisis, putting pressure on prices to rise.

The government's oil tax reduction policy stance also paradoxically acted as a variable to increase the extent of the reversal. As the government set a larger cut in gasoline, which was relatively high when the oil tax cut was carried out as part of its high price measures, the price advantage of diesel, which was maintained by the tax gap, disappeared. Gasoline had a clear factor in falling prices due to lower taxes, while diesel, whose international prices soared, resulted in the cost increase offsetting the effect of the tax cut.

The high price of diesel is shifting a serious cost burden to the entire domestic industry. In particular, the freight transport industry and construction sites that use diesel as the main fuel were directly hit, which soon leads to higher logistics costs and higher construction costs, leading to a vicious cycle of raising consumer prices as a whole. Diesel car owners, which were explosively distributed with low maintenance costs as their strengths in the past, have also lost their economic advantages and are accelerating changes in the automobile industry's ecosystem, such as intensifying avoidance of diesel cars in the used car market.

Experts warn that unless structural flaws in the international energy market are resolved, such a reversal is likely to become a new standard, not just a temporary happening. This is because tight supply and demand for diesel will continue for a long time at a time when refiners around the world are reluctant to expand new refining facilities due to carbon neutrality policies. In the end, consumers are faced with a time when they should seriously consider energy consumption efficiency and transition to eco-friendly mobility in preparation for the era of high oil prices rather than staying in the price structure of the past.

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*This content was translated by AI.