The Democratic Party of Korea and the oil refining and gas station industries have agreed to abolish the gas station post-settlement system, which has been blamed for driving up consumer prices. They also agreed to end exclusive contracts requiring full purchases from a single supplier, allowing gas stations to sell multiple brands of fuel.
Officials from the Democratic Party's Euljiro Committee, the Ministry of Trade, Industry and Energy, the Financial Services Commission, and the Fair Trade Commission held a mutual cooperation agreement ceremony at the National Assembly on Wednesday and announced the cooperation plan.
Attendees included Floor Leader Han Byeong-do, Euljiro Committee Chairman Min Byeong-deok, and responsible lawmakers Kim Nam-geun, Jeong Jin-wook, Lee Jae-kwan, Lee Kang-il, and Park Hee-seung. Also present were Ahn Seung-bae, chairman of the Korea Gas Station Association; Joo Byeong-gi, chairman of the Fair Trade Commission; Han Hee-min, vice president of SK Energy; Kwon Dae-young, vice chairman of the Financial Services Commission; Park Dong-il, director general for industrial policy at the Ministry of Trade, Industry and Energy; Ahn Young-mo, head of policy at GS Caltex; Park Chi-woong, head of domestic business at HD Hyundai Oilbank; and Lee Geon-myeong, vice president of S-OIL.
Under the agreement, oil refiners will confirm and publicly announce daily base prices in advance, while the existing post-settlement system will be abolished. The post-settlement system involves refiners supplying petroleum products to gas stations first and then settling payments based on international benchmark prices after a certain period. Critics have pointed out that this forces gas stations to purchase products without knowing the exact final price, contributing to fuel price increases.
The agreement also focused on abolishing the exclusive trading structure and increasing transparency in price determination. The key provision is transitioning from the existing exclusive trading system, which required 100% purchases from a contracted refiner, to a "mixed contract" system that reduces the exclusive portion to 60%. This ratio will be determined through negotiation between parties, and discrimination in supply prices, volumes, or trading conditions based on this ratio is prohibited.
"I thank the four oil refiners for choosing the path of mutual benefit and cooperation," Floor Leader Han said. "I expect today's agreement will contribute to stabilizing the daily lives of the public, the end consumers."
Chairman Min said, "This agreement is significant in that we have agreed to share the burden so the industrial ecosystem can endure by improving unreasonable trading structures such as exclusive contracts and post-settlement."
Rep. Jeong Jin-wook, who led this mutual cooperation agreement, said, "By abolishing the exclusive contract structure between refiners and gas stations and transitioning to mixed contracts for at least a certain percentage of total volume, we are expanding gas stations' choices and promoting market competition. Oil refiners will abolish the post-settlement system and improve predictability in price determination."