South Korea Implements Price Capping System for Petroleum Due to War with Iran
This is probably going to be happening across the world as the war with Iran drags on:
The government said Thursday it will implement a temporary fuel price cap system starting at midnight to help ease cost burdens amid supply concerns over the ongoing Middle East crisis, officials said Thursday.
The government announced the plan at a task force meeting of ministers in charge of managing market prices, as domestic fuel prices have fluctuated since the United States and Israel launched airstrikes against Iran late last month.
It marks the first time since 1997 that South Korea is enforcing the price ceiling system using a provision in the Petroleum Business Act that allows the industry minister to designate a maximum sales price when oil prices fluctuate sharply and threaten economic stability.
Under the price cap system, the government will set maximum prices for oil products South Korean oil refineries supply to gas stations and distributors, according to the Ministry of Trade, Industry and Resources.
The ministry said it has decided to apply the price ceiling on supplies by oil refineries, not the retail prices at gas stations, considering that retail prices vary widely by region and business strategy and operating practices of gas stations.
The maximum price will be calculated by multiplying the weekly average supply prices of regular gasoline, diesel and lamp oil products, and the adjustment rate of the Mean of Platts Singapore (MOPS), added with related taxes. MOPS is a benchmark price for petroleum products across the Asia-Pacific region.
The initial price cap will be set at 1,724 won (US$1.17) per liter for regular gasoline, 1,713 won per liter for diesel and 1,320 won per liter for lamp oil.
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