The unstoppable decline in oil prices, the gap between geopolitical expectations and reality behind it. > News

According to the latest data from Korea National Oil Corporation Offinet, the average selling price of gasoline at gas stations nationwide in the second week of June was 2,009.9 won per liter, down 0.5 won compared to the previous week. Diesel also maintains a downward curve, falling 0.3 won to 2,004.8 won per liter, a significant trend that has continued for four consecutive weeks. Experts point to fluctuations in international oil prices as the main reason for this downward trend. In particular, as the possibility of an end-of-war agreement between the United States and Iran has recently emerged, expectations that geopolitical risks in the Middle East will ease have been reflected in the international market. In fact, these expectations resulted in international oil prices falling by more than 3%, and the effects are gradually being reflected in domestic gas station sales prices over time.

However, even amid the macro indicators of a nationwide decline, the regional price imbalance is still an unresolved problem. In the case of Seoul, the price range was 2,051.5 won per liter, the highest in the country, showing a paradoxical increase of 0.7 won compared to last week. On the other hand, Daegu showed a contrasting trend, dropping by 1.4 won to 1,990.6 won, which clearly shows how completely different the distribution structures, operating costs, and competitive environments of each region are. The reason why it is difficult to feel an immediate price reduction in all regions simply because the international oil price falls is because complex variables such as regional logistics costs, rent, and intensity of competition between gas stations intervene in the price determination process.

The market's view on this downward trend in oil prices is divided between cautiousness and optimism. Optimists predict a long-term downward trend in oil prices, saying that the huge geopolitical issue of the agreement will lead to stabilization of the supply chain. On the other hand, prudentists note that the current decline remains at the 0.5 won level, citing the fact that the situation in the Middle East can change rapidly again at any time. In other words, the reality that the decline in international oil prices is not being fully passed on to domestic consumer prices also proves the structural limitations of the domestic energy market, such as fixed distribution margins and exchange rate volatility. The 'falling oil price' that consumers feel is still hindered by the high wall of the 2,000 won range.

Energy prices are not just a matter of gas stations, but are also the blood vessels of the national economy, determining logistics costs and production costs. The fact that oil prices have fallen for four weeks in a row is certainly a positive sign, but we must not overlook the fact that the pace of the decline is far from enough to offset the rise in prices. Policy makers must continue efforts to strengthen market surveillance and ensure transparency in the distribution structure so that the effects of international oil price declines can be communicated more quickly to consumers. In addition, given the structure of our economy, which is highly dependent on energy, it is urgent to prepare fundamental measures such as switching to new and renewable energy or improving energy efficiency, rather than reveling in the short-term decline in oil prices.