The new measure is expected to contribute in promoting market competition and reducing oil prices…it will improve quality management and accountability.
Autonomous sale of oil products with multiple brands (sale of mixed oil products) will eventually be implemented on a phased basis after years-long controversies in the oil market in Korea.
The sale of mixed oil products is a practice of allowing a gas station with the pole sign of ‘A’ oil refinery company to sell oil products of ‘B’ oil refinery company also. Gas stations and oil refinery companies have been showing different positions over this practice, but controversies are now virtually resolved.
Over these years, gas stations have been arguing that they should sell mixed oil products to stabilize oil prices, while oil refinery companies expressed concerns over their inability to guarantee quality of products in such cases.
The Ministry of Knowledge Economy (Minister: Hong Suk-woo) recently decided to start implementing this month the measure of selling mixed oil products at gas stations after discussion with 4 oil refinery companies.
With the measure taken by the Knowledge Economy Ministry as part of its plan of promoting competition in oil products market and improving distribution structure announced on April 19 this year, gas stations now can sell certain proportion of mixed oil products based on autonomous contracts with oil refinery companies.
Based on the new measure, oil refinery companies are ruled to agree with gas stations on selling oils of different refinery companies through the identical gas pump after mixing them in the identical storage tank. Gas stations should indicate certain marks that tell consumers the fact of selling mixed oil products.
The Knowledge Economy Ministry expects competition in the oil market will be further promoted since gas stations that sell mixed oil products will be able to sell imported products in addition to those of 4 domestic oil refinery companies.
Also, it expects that quality management will be improved and accountability will be clarified as the sale of mixed oil products, which has been practiced by some gas stations for years, is institutionalized.
Also, controversies over unfair trade practices, such as forcing gas stations to accept exclusive purchase contract, are expected to be reduced because even gas stations under an exclusive purchase contract with a certain oil refinery company will now be able to sell mixed oil products if they desire.
On the argument that the sale of mixed oil products will make it difficult to guarantee quality, the Knowledge Economy Ministry explained that it will not affect quality or fuel efficiency as gas stations will mix only good quality oils that passed tests of Korea Institute of Petroleum Management.
A responsible official at the Ministry said, “It has been a practice among large number of gas stations to sell mixed oil products. The latest measure institutionalized this practice, clearly defining quality management and accountability.”
The official predicted, “Oil prices will be reduced by certain rate on long-term basis as gas stations that desire to sell mixed oil products will be able to procure cheaper oils.”
Meanwhile, Korea Independent Oil Stations Association (President: Jeong Won-cheol) welcomed the measure of allowing the sale of mixed oil products that can improve the distribution structure monopolized by oil refinery companies and contribute to reducing oil prices.
Korea Oil Stations Association (President: Kim Mun-sik) also welcomed the permission of the sale of mixed oil products, as it will enable gas stations to provide oils to consumers for cheaper prices.
However, it expressed some disappointment on the point that the means of selling mixed oil products without indicating particular marks is not allowed.