Exit Strategy for the Price Ceiling Delayed Amid Surging Global Oil Prices
Oil price ceiling system: As global oil prices surge, concerns grow over the timing of its end Check the measures now to reduce price distortions and the burden on public finances
As international oil prices rise sharply again, it is becoming more difficult for the government to decide when to end the oil price cap currently in place. This system was introduced as a temporary measure to prevent shocks in international oil prices from quickly spreading to domestic prices.
As of the 17th, Brent crude and WTI futures prices remained around $100 per barrel, and Dubai crude also continued its strong upward trend. Meanwhile, gasoline prices at domestic gas stations showed little change even after falling for 17 consecutive weeks, because the rise in international oil prices has not yet been fully reflected and the price cap is suppressing price increases.
The government believes this system has the effect of lowering consumer price inflation, but side effects such as market price distortions, weakened incentives to reduce demand, and fiscal burdens from compensating refiners for losses are also being pointed out. Experts say that before oil prices rise further, the government should consider price normalization together with direct support measures for vulnerable groups.