The Democratic Party of Korea has decided to reform unreasonable practices in the refining industry amid surging domestic fuel prices driven by the Middle East crisis. The party is moving to address post-settlement transactions — where payments are made without a fixed price — and ease exclusive dealing arrangements that require gas stations to purchase all their fuel from a single refiner.
Members of the Democratic Party's Euljiro Committee held a "second social dialogue meeting" with officials from the Ministry of Trade, Industry and Energy, the Financial Services Commission (FSC), and the Fair Trade Commission (FTC) at the National Assembly's parliamentary office building on Thursday. Representatives from Korea's four major refiners — SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank — also attended.
Rep. Jeong Jin-wook of the Democratic Party told reporters after the meeting, "Regarding post-settlement, the refiners said they would accept either abolishing it or settling after a certain period. Gas stations said settling approximately one week later would be preferable. This has been agreed upon."
The parties also agreed to extend S-Oil's existing "daily price disclosure" system to all refiners. The practice is seen as enhancing transparency by allowing gas stations to clearly know their purchase prices.
On the exclusive dealing system, Jeong said, "The Euljiro Committee has been discussing a target of 50% (for the exclusive dealing ratio) so far." He added, "Some refiners said they needed more discussion, so we did not reach full agreement, but they agreed in principle to eliminate the exclusive dealing system and allow blended transactions."
Jeong said the institutional changes would likely benefit consumers. "Ultimately, there is a high likelihood that these benefits will lead to lower consumer prices. This will serve as an opportunity for fair transactions, freeing gas stations from being forced into unfavorable trading conditions," he said.
Rep. Kim Nam-geun said, "Under exclusive dealing, when one side unilaterally raises prices, the other has no choice but to follow, which cements the oligopoly." He added, "The post-settlement system has been exploited by setting high initial purchase prices and then offering discounts later. These practices should be largely abolished or eased." Kim said, "If an agreement is reached as early as next week, our floor leader and party chair plan to participate and push for a social consensus."
Rep. Lee Gang-il also questioned the fairness of how oil price fluctuation risks are shared. "I want to ask whether the risks of oil price volatility are being fairly divided between refiners and gas stations," he said. "It seems rather that the opaque post-settlement system and mandatory full-purchase arrangements act as a double shackle, unilaterally shifting the burden onto gas stations."