On November 5th, the Korea Petroleum Quality and Distribution Authority (KPetro) investigated gas stations nationwide to prevent the damage by “Fake-Petroleum”. This is in response to the fake petroleum crisis happening at gas stations on National Route 23 in Gongju, Chungnam province that began on October 26th. Actually, from October 26th to November 12th, there were over a hundred cases of fake petroleum damage reported to KPetro. Fake petroleum refers to the petroleum that is manufactured by mixing other products with pure oil for fueling. This can cause many problems including having serious damages to the vehicles, and causes environmental problems. Especially on November 2nd, an ambulance carrying a patient suddenly stopped on the road in Nonsan, it turns out that the fake petroleum was to fueled the car. Why doesn’t fake petroleum disapear from the nation? There are three reasons.

First, excessive price competition between gas stations is the problem. In Korea, in the price of fuels that are used in consumers’ vehicles, taxes account for about 60%. According to the KPetro, Korea has the third-highest proportion of taxes on gasoline prices among the OECD countries. If fake petroleum is manufactured and sold at a gas station, stations don’t have to pay high oil taxes, therefore they can make a high profit by selling fuel at a lower price compared to the standard price. Until now, price competition between gas stations has intensified in Korea, with the introduction of the abolition of distance restrictions between gas stations and public gas stations. In fact, in the 23rd National Highway area, where more than 100 cases of fake oil have been reported, there are 24 gas stations in the 30km around the area. Along with the Kpetro, the Korea Oil Station Association has been struggling to control competition between gas stations. However, it has not worked very well. Kim Pil-Su (Prof. of Automotive Engineering, Daelim University) said, “Excessive price competition among gas stations could eventually lead to gas stations manufacturing fake petroleum."

Second, a lax controlling system of fake petroleum is a problem. Currently, the KPetro is exclusively responsible for the management of oil quality at all gas stations nationwide. However, supervising fake petroleum is not being done properly. In order to block the distribution of fake petroleum, the KPetro is operating dozens of undercover vehicles to determine the authenticity of the oil on the spot. However, the numbers on the license plate of undercover vehicles were exposed on their webpage for several years therefore the purpose of going undercover had not worked. In addition, two gas stations on Route 23 where fake petroleum was discovered were the main managed gas stations of the KPetro. However, the KPetro said it has inspected the gas stations 16 times in the past 10 months, but all of them have confirmed the fuel to be normal. Bok Suk-Hyun (32, Teacher) said, “I got financial damage of 3 million won by the fake petroleum which put in on October 21st. The KPetro said it had been cracking down on the gas station for 10 months, but there was no problem. Then why would there be more than 100 victims? I don't trust the crackdown by the KPetro."

Third, weak punishment for fake petroleum sellers is the problem. A gas station in Gongju, which recently caused a number of fake petroleum victims, had its business suspended for only three months and was fined 7 million won. According to the current law, a station will be punished with a three-month suspension for a first infraction, and a six month suspension for a second one for selling fake petroleum. However, if a caught gas station pays a fine, the station can start business immediately without suspension. In addition, if the name of the representative is changed, the existing punishment record of the gas station will be deleted. However, in Japan, fake petroleum manufacturers are sentenced to up to five years in prison or fined 50 million won or less. In the United Kingdom, petroleum product vendors are required to register their licenses. If a fake petroleum manufacturer is caught, the license is suspended forever even if it is caught for the first time. 

Prof. Kim said, “The manufacture and sale of fake petroleum is an act of deceiving consumers. Fake petroleum also damages the engine of cars seriously. This can lead to dangerous accidents. The current system to prevent fake petroleum oil is weak, making it easy to repeat offenses. Therefore, strong punishment standards to eradicate fake petroleum are needed, such as suspension of licenses forever for the first detection."  

By Lee Dong-Kyu, Reporter

goldenegg@pusan.ac.kr