Crude oil import costs rose from W341 a liter in December of last year to W377 in May. (US$1=W938) But the price refiners charge consumers after processing crude oil jumped from W485 per liter to W606. The Finance Ministry says this happened since the margin refiners placed on their price tags rose from W144 per liter to W229. “Refiners did not lower gasoline prices much when crude prices dropped. But when crude prices rise, refiners are raising prices by a greater margin,” the ministry said. Refiners were quick to respond, saying that the Finance Ministry exaggerated their profits by including tariffs in their margin. They added that the root of the problem is the high taxes on oil. Per liter of gasoline, which costs W1,538, 58 percent or W884 is tax, while the profit margin for refiners is at most 5 to 6 percent, they claim. They’re saying the government is the culprit behind soaring prices at the pump.

In absolute terms, gasoline prices in Korea are double that of the U.S., and 2.5 times higher than in China. Gasoline prices in Korea are 70 percent higher than in Japan, which also does not produce a single drop of oil. If you consider per capita gross national income, the differences are even greater because oil taxes, accounting for 60 percent of the price tag, are too high. They’re three times higher than in Japan, six times higher than in the U.S. and seven times more than in Germany.

The Korean government collected W26 trillion last year from oil taxes. Within the oil tax are transportation taxes, motor operation taxes, education taxes, value-added and other types of taxes. Over the past six years, oil tax revenues rose by W10 trillion. Every time calls mount for lowered oil taxes, the government said that the proportion of oil taxes is not that big compared to other OECD member nations. That’s a simple comparison to countries where average incomes are two to three times higher than ours.

Refiners have no right to blame the government either. Last year, the country’s five refiners had a banner year, with operating profits of more than W2 trillion. The Korea Energy Economics Institute has data showing that refiners lowered gasoline prices just 0.74 percent when crude price dropped 1 percent, while raising them 1.24 percent when it went up 1 percent. Refiners were slapped with a W52.6 billion penalty in February for collusion and profiteering. In the process of passing the blame for high gasoline prices, the real cause for the excessive prices has been revealed. Now the only thing left to do is to lower gasoline prices.