Seoul — South Korea's gasoline demand dropped 16% year on year in October, the sharpest decline in 20 years since October 1998 when the country was hit by the Asian financial crisis.
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The country's consumption of gasoil also dipped 10.6% year on year last month to 5.64 million barrels, the biggest decline since February 2013, according to data from Korea National Oil Corp. compiled by S&P Global Platts.
The volume was the smallest since February 2014 when the country consumed 5.34 million barrels.
South Korea's gasoil consumption dropped to 12.3 million barrels in October from 13.76 million barrels a year earlier.
"The sharp declines in auto fuels are attributable to higher pump prices and the economic slowdown," a KNOC official said.
Pump prices of 92 RON gasoline -- the more popular grade -- averaged Won 1,681/liter ($1.48/liter) in October, up 11.8% from a year earlier. It was the highest price in four years, according to the official.
Pump prices for 95 RON gasoline averaged Won 1,948/l in October, up 6.2% from a year ago.
Retail gasoil prices jumped 14.6% year on year to average Won 1,485/l in October.
Due to the sharp decline in consumption, the country's stocks of gasoline jumped 34% year on year to 6.98 million barrels, according to the KNOC official.
South Korea's gasoil stocks rose 7.1% year on year to 11.58 million barrels in October.
During the first 10 months of this year, South Korea's gasoil demand fell 1.7% year on year to 136.99 million barrels, while gasoline consumption fell 0.7% year on year to 65.81 million barrels.
South Korea's consumption of oil products, including naphtha, fell 8.5% year on year to 73.35 million barrels, or an average of 2.37 million b/d in October.
This marks the fourth consecutive decline in oil demand since July when consumption dipped 2% from a year earlier. The October oil consumption was also down 4.4% from September.
LPG consumption dipped 7.2% year on year to 8.11 million barrels in October, the third consecutive decline on a yearly basis. Naphtha consumption fell 11.2% year on year to 36.33 million barrels.
South Korea's demand for auto fuels are expected to rebound in November, driven by tax reduction and lower international crude oil prices.
The government has cut taxes on auto fuels by 15% for six months from November 6 to help lower costs and boost domestic demand.
Taxes account for 55% of the retail gasoline price and 46% of the gasoil price, which have prompted consumers to ask for a reduction in domestic oil taxes.
The 15% tax cut would lower the retail gasoline price by around 7% and gasoil price by 6%, according to the Ministry of Trade, Industry and Energy.
Thanks to the tax cut, pump prices for 95 RON gasoline fell to 1,547/liter in the third week of November, from 1,686/liter a month earlier. Retail gasoil prices also fell to 1,402/liter in the third week of this month, from 1,490/liter a month earlier.
The Bank of Korea recently trimmed its economic growth outlook to 2.7% for this year from its earlier projection of 2.9%.
The central bank has also revised down its growth forecast for 2019 to 2.7% from 2.8%. The South Korean economy expanded 3.1% in 2017 and 2.9% in 2016.
-- Charles Lee, firstname.lastname@example.org
-- Edited by E Shailaja Nair, email@example.com