As the bidding schedule for supplying fuel to thrift gas stations approaches, domestic oil companies such as SK Energy, S-Oil, Hyundai Oilbank, and GS Caltex are contemplating whether to participate. Thrift gas stations have the advantage of securing domestic supplies stably, but the low profitability due to the lowest bid is a disadvantage.
According to the refining industry on the 9th, the bidding announcement for thrift gas stations is expected to come out as early as next month. The previous announcement was on July 13, 2023, and the bidding took place on August 10 of the same year. At that time, as a result of the bidding, SK Energy was tasked with supplying fuel to the Korea National Oil Corporation (KNOC) and the Korea Expressway Corporation's thrift gas stations by September 30 of this year, while S-Oil was assigned to supply fuel to NongHyup's thrift gas stations.
The fuel supply for thrift gas stations can be extended for one or two years. In this case, no separate bidding announcement is made. A representative from the Korea National Oil Corporation (KNOC) noted, "No decision has been made yet on the extension."
Thrift gas stations were introduced by the Lee Myung-bak administration in response to soaring international oil prices to stabilize prices. The Korea National Oil Corporation (KNOC) and others supply fuel to thrift gas stations through a joint purchasing format with refiners. Since the goal of introducing thrift gas stations was to stabilize fuel prices, the bidding is conducted on a lowest-bid basis.
The selling price at thrift gas stations tends to be lower than that at non-thrift gas stations. According to a report titled "Analysis of Price Reductions by Operating Entities of Thrift Gas Stations" released by the Korea Energy Economics Institute in March, over the past five years, the average selling price at thrift gas stations was about 20 to 50 won lower per liter compared to non-thrift gas stations. The Korea Energy Economics Institute analyzed, "Thrift gas stations were able to sell cheaper petroleum products directly to consumers through bulk joint purchasing, and they could exert downward price pressure on nearby gas stations, also expecting an indirect price reduction effect."
An industry official noted, "While being selected as a supplier of fuel to thrift gas stations has the advantage of securing domestic supplies stably for two years, it is considered a loss leader due to low revenue, making it a situation akin to a 'chicken rib,' which is large in use or profit but too valuable to discard. We plan to decide whether to participate once the announcement comes out."