By Seo Jee-yeon
Staff Reporter

Local refineries have raised ex-factory prices of gasoline and other fuel oils starting on Thursday a move certain to lead to higher consumer prices amid daily record-breaking rises of crude prices in international markets.

The price of gasoline has been hiked by the nation’s largest refiner, SK Corp., 10 won to 1,306 won per liter, by Hyundai Oil Bank 12 won to 1,307 won and by LG-Caltex Oil, which announced a freeze of its oil prices on Aug. 2, seven won to 1,296 won.

The three refineries also increased ex-factory diesel oil prices to as much as 943 won per liter, with the consumer price soaring to 1,040 won a liter at a gas station in Seoul on Wednesday, the first time it has exceeded the 1,000 won mark.

The average price of diesel oil last week was 936.96 won a liter, an increase of 4.04 won from the previous week, according to the state-run Korea National Gas Corporation (KNOC) on Wednesday.

The continuing rise in oil prices has prompted the government to seriously consider cutting taxes to absorb some of the impact on both individuals and industrial companies.

In the latest weekly report on gas prices issued by the KNOC, the average gasoline price nationwide posted 1369.68 won last week, nearing the record high of 1.377.11 won per liter set in the second week of June this year.

The report was compiled on the basis of a survey of 556 gas stations nationwide.

``Since fluctuations in international oil prices tend to be reflected in local consumer oil prices two months later, the current surge in global oil prices could push average gasoline prices nationwide above 1,400 won in the coming month,’’ a KNOC officials said.

International oil prices set a new record Tuesday, rising above $44 a barrel in the United States due to supply concerns amid continued terrorism fears and uncertainty over the fate of troubled Russian oil giant Yukos, which produces two percent of the world’s oil.

Dubai crude, which accounts for 70 percent of the nation’s oil imports, also exceeded $37 a barrel on the same day, marking its highest price ever.

If the hike in oil prices continues, the local economy will be weighed down due to rising export costs in addition to the surge in consumer oil prices.

The Ministry of Commerce, Industry and Energy (MOCIE) is considering cutting taxes, including transportation duties, which account for more than half of consumer oil prices, in a bid to stabilize oil prices at home, but the Ministry of Finance and Economy has been opposed to such a move due to the reduction in tax revenues.

``We are closely watching the situation but we obviously have to take measures against the continuing increase in oil prices which is having a major influence on exports in addition to the outflow of foreign exchange,’’ a senior MOCIE official said.

But it is uncertain if the ministry will be able to implement the tax reduction plan as the Ministry of Finance and Economy is reluctant to support the plan due to a fear of a shortage in tax revenues.

The MOCIE cut taxes on oil imports for the same purpose on April 30th when global oil prices soared above $40.

``To solve the long-lasting energy supply issue, the ministry is likely to stress mid- and long-term measures like the development of overseas oilfields and improvements in energy efficiency, rather than short-term measures like tax cuts, in the economy ministers meeting scheduled for Friday at Chong Wa Dae,’’ a MOCIE official said.

jyseo@koreatimes.co.kr