Korean gas stations will soon be able to sell fuel from multiple brands such as SK Energy and GS Caltex at the same location. The change comes as unfair practices including one-to-one exclusive dealing arrangements between refiners and gas stations are being reformed, triggered by surging oil prices stemming from Middle East tensions. The market expects the move to lower fuel costs through increased price competition.
The Democratic Party of Korea's Euljiro Committee, which focuses on protecting small businesses, will hold a "Gas Station-Refiner Social Dialogue Cooperation Agreement Ceremony" at the National Assembly in Yeouido, Seoul, on January 9, according to political sources. The ceremony will unveil cooperation measures for burden-sharing between the refining industry and gas stations amid persistently high oil prices due to the prolonged Middle East conflict.
The Euljiro Committee, the government, Korea's four major refiners — SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank — along with the Korea Gas Station Association have held three rounds of meetings since launching a social dialogue body on December 26 through January 8.
The four refiners and the gas station industry have agreed to reform the long-standing practice of exclusive dealing arrangements. Until now, gas stations contracting with a specific refiner typically received 100% of their supply from that company. Going forward, stations will be allowed to handle products from multiple refiners within a certain percentage range.
Sources in political circles suggest exclusive dealing ratios could be lowered to around 60%. This means gas stations could source up to 40% of their fuel from other companies. Specific details including the final ratio and implementation method will be announced at the ceremony.
If mixed supply becomes reality, the gas station landscape is expected to change. While stations have traditionally displayed pole signs bearing only one refiner's brand, those handling products from multiple refiners will be marked as "mixed gas stations." The Democratic Party believes this will enable consumers to compare and choose products from different refiners at a single station, inevitably spurring price competition among suppliers.
"The market will change significantly enough to alter consumer patterns at gas stations, creating competition among stations," said Rep. Jung Jin-wook of the Democratic Party's Euljiro Committee. "This will naturally lead to lower consumer prices."
Industry players have also reportedly narrowed their differences on abolishing the post-settlement system. Under this system, refiners set final supply prices by reflecting international prices after a certain period following product delivery. The practice has drawn criticism because it forces gas stations to set conservative retail prices due to difficulty predicting future settlement costs.