Government announces fuel tax cuts… Decrease in LNG tariff rate

The government has officially announced a fuel tax cut.

It also decided to reduce the quota of liquefied natural gas (LNG) tariffs to absorb factors that increase gas rates.

On the 22nd, the government held a policy review meeting and a meeting of the vice-ministers for price relations at the government complex in Seoul, presided over by the first Vice Minister of Strategy and Finance Lee Won Lee.

In his remarks, Vice Minister Lee said, “We will temporarily lower the fuel tax.”

This is the first time that Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki has taken a step further from the remarks recently released by the National Assembly’s Planning and Finance Committee that “we are considering lowering the fuel tax internally”.

Vice Minister Lee added, “We will confirm specific measures such as the extent of the fuel tax cut and the timing of its application as soon as possible and announce the details at the emergency economy meeting next week.”

Vice Minister Lee continued, “In response to the sharp rise in natural gas prices, we will also announce a plan to further lower the quota tariff rate on liquefied natural gas (LNG), which is currently 2%,” and “Through this, the cost of living of the low-income economy, including energy costs, will be burdened through this.” We will support easing,” he said.

Currently, international oil prices are in the low 80s/barrel range, the highest since 2018. The price of natural gas stands at $35 per MMBtu, which is seven times the average price last year.

In the case of international oil prices, Vice Minister Lee pointed out the reasons for a recovery in demand due to the supply of vaccines, supply management of OPEC+, and production disruptions due to hurricanes in the US.

Natural gas, one of the most important energy sources in winter, has seen a surge in demand due to extreme weather in Europe and a global environment-friendly environment. The sharp rise in natural gas prices has led to a shift in demand for natural gas to oil demand, raising oil prices.

However, Vice Minister Lee emphasized that “even under these circumstances, the domestic energy supply and demand situation is being maintained stably.”

It is introducing 80 million barrels of crude oil every month without any setback, and has also completed the purchase of the target for this year, securing a total of 100 million barrels. He explained that the proportion of long-term contracts for natural gas is around 80%, and power generation, which accounts for 50% of the usage, is reduced by using other raw materials, so there is no major difficulty in supply and demand so far.

Vice Minister Lee also said that he would expand the use of temporary ships and aircraft to support import and export logistics.

He explained that after putting in 8 temporary ships in October, five of them will be put into the US route with heavy congestion by mid-November, and the number of cargo planes operated by the national carrier on the American route will increase to more than 10,000 this year.