Starting today, the maximum retail prices of gasoline and diesel distributed at gas stations nationwide rise to 1,934 won and 1,923 won per liter, respectively. The government will freeze public utility rates including electricity tariffs through the first half of the year and specially manage prices of 43 items including key agricultural products and taxi fares. Considering growing supply instability for everyday goods, the government will not only restrict exports of naphtha — a key plastics feedstock — but also control its production and distribution if necessary.
The Ministry of Economy and Finance (MOEF), the Ministry of Trade, Industry and Energy (MOTIE), the Ministry of Agriculture, Food and Rural Affairs, and other agencies held a "Special Consumer Price Management Task Force Meeting" at the Seoul Government Complex on the 26th to discuss these measures. The second round of maximum prices for gasoline and diesel were raised by 210 won each from the first round. Although international oil prices surged significantly over the past two weeks, the government kept the caps below 2,000 won by cutting fuel taxes by 8 to 15 percent.
The government will impose an outright ban on naphtha exports amid growing supply concerns. If necessary, it will invoke "emergency supply-demand adjustment measures" to order naphtha production and distribution. The move appears to be a drastic step prompted by growing fears of a petrochemical product supply crisis around April and signs of hoarding for some products.
Public utility rates including electricity tariffs will be frozen through the first half. President Lee Jae-myung said at the second emergency economic review meeting held at the Blue House on the same day, "We intend to maintain electricity rates without changes as much as possible." He added, "Keeping rates unchanged may widen losses, so I ask for your special cooperation in conserving electricity." The government also plans to expand the number of specially managed consumer price items from 23 to 43. The aim is to minimize the impact on the everyday economy from oil and liquefied natural gas (LNG) supply instability caused by the Middle East war.
Following its first implementation of a maximum price system on petroleum products in 29 years, the government has now imposed production, export, and distribution controls on naphtha — often called "the rice of industry." Simultaneously, it is freezing public utility rates for the first half while designating 43 consumer items for special price management. With crude oil prices surging to exceptional levels due to the Middle East war, the government is mobilizing its full policy arsenal to minimize the impact on daily life.
MOTIE announced it will gazette and enforce "Regulations on Naphtha Export Restrictions and Supply Stabilization" for five months starting midnight on the 27th. The core of the measure is to ban naphtha exports in principle and allow the government to order businesses to produce and supply naphtha when necessary. To this end, the government will receive daily reports from naphtha producers and users on production, imports, usage, and inventory levels. It will also issue adjustment orders if naphtha inventories increase excessively without justifiable reason to prevent hoarding. However, naphtha exports will be permitted as an exception with approval from the MOTIE minister.
Naphtha is not only a critical material for major industries such as semiconductors, automobiles, and electronics, but also the raw material for various petrochemical products used in everyday life. The government's emergency action comes amid growing concerns of a petrochemical product crisis in April as refineries have successively halted operations. The measures were invoked under Article 30 of the Supply Chain Stabilization Act, the "emergency supply-demand adjustment measures" provision. The government previously used the same mechanism to control supply of specific products during the 2020 mask shortage and the 2021 urea solution crisis.
The government is also stepping up market enforcement on urea and urea solution. Government and private sector stockpiles of urea and urea solution stand at 2.8 months' worth — a sufficient level — but the measures are aimed at preventing further confusion. Deputy Prime Minister and MOEF Minister Koo Yun-cheol said, "Starting midnight on the 27th, we will enforce a ban on hoarding of urea and urea solution, while also actively cracking down on illegal and unfair practices and expanding urea imports."
The government also minimized the increase in maximum gasoline and diesel prices. According to Opinet, the Korea National Oil Corporation's price information system, international gasoline prices jumped more than 65 percent from $82.1 per barrel to $135.55 per barrel as of the 25th. Diesel prices also soared from $92.9 to $205.54 per barrel over the same period. By those figures, the second maximum price for gasoline should have exceeded 2,000 won per liter, but the government explained it lowered the final price increase by cutting fuel taxes.
During the first maximum price period, the fuel tax on gasoline was 763 won per liter, but it drops to 698 won starting the 27th — a reduction of 65 won. The fuel tax on diesel was cut by 87 won, from 523 won to 436 won. As a result, consumers are expected to be able to purchase petroleum products at prices around 2,000 won. Gas station retail prices are typically set by adding a margin of about 100 won to the cost supplied by refiners.
The number of specially managed consumer price items has expanded significantly from 23 to 43. Among manufactured goods, household vinyl, cosmetics, and manufactured goods in general were added to the existing list of daily necessities such as pharmaceuticals, sanitary pads, and detergents. Among food items, pollock, squid, croaker, cucumbers, and tomatoes were newly added to the management list. The government also plans to monitor whether service fees such as parcel delivery charges and moving costs rise, in addition to electricity, gas, and heating rates.
The government will pursue supply stabilization measures in parallel to prevent price volatility for these items. For rice, 100,000 tons of government grain will be released to the market, with an additional 50,000 tons under review for deployment if needed. Egg production has declined due to the spread of highly pathogenic avian influenza (AI), and in response to surging prices, the government plans to push for additional imports of 4.71 million eggs as early as next month.
The government also plans to stabilize mackerel prices by diversifying import sources to expand supply. It will invest 15 billion won ($11 million) to expand discount programs of up to 50 percent for agricultural, livestock, and fishery products — focusing on items with rising prices such as rice, eggs, and mackerel — during April and May. Livestock supply stabilization measures were also included. Pork prices have risen due to the impact of African swine fever (ASF), and the government is reviewing a plan to raise the shipping weight from 115 kg to 120 kg, which is estimated to increase supply by approximately 4.3 percent.
Public utility rates will maintain the first-half freeze. Central government public utility rates will be frozen, and local public utility rates for taxis, city buses, and subways will be managed in coordination with local governments to delay any increases to the second half. Enforcement against unfair practices will also be strengthened. For pork, the government will inspect inventory holdings of large processors, strengthen sanctions against colluding companies, and pursue measures to exclude them from policy funding support.
The government will conduct daily price surveys on items closely tied to daily life and strengthen inspections against unfair practices such as collusion. A government official said, "We plan to complete deliberations on major collusion cases involving printing paper, eggs, flour, and starch syrup within the first half," adding, "We will continue to identify new items with high consumer impact and strengthen inspections."
