By: Benjamin Katzeff Silberstein
A while back, I speculated that fuel prices in North Korea might go down after Kim Jong-un’s visit to China. This is precisely what happened, Daily NK reports. Causality is of course impossible to prove, but given circumstances (and the historical pattern of fuel price movements, which I write about in a forthcoming working paper), a connection doesn’t seem unlikely.
“The cost of 1 kg of fuel has fallen by around 2,500 KPW from 13,000 KPW two weeks ago,” said a North Hamgyong Province-based source on January 22. “The fall of 2,500 KPW per kg is a lot, so it’s being welcomed by merchants.”
The drop in fuel costs has impacted gasoline prices in the country’s northern region, with the source adding that truck drivers he spoke with have reported that the fuel prices in Pyongyang are similar.
Despite the restrictions on oil imports into the country due to international sanctions, smuggling across the country’s porous sea and land borders have kept gasoline supplies (including diesel) steady in the country, the source said.
The cost of fuel in North Korea last year fluctuated considerably due to sanctions pressure. News outlets reported last year that fuel prices reached 27,000 KPW per kg in early January 2017, a 60% spike from December 2016 prices.
The prices dipped back down to around 15,000 per kg, before settling at 15,500 KPW in December 2018. This suggests that gasoline prices in North Korea are more sensitive to international sanctions than other commodities like rice.
The recent fall in prices is likely due to a reduction in the price of smuggled fuel from China and the rising volumes of diesel fuel being refined and sold in the country.
Domestically refined diesel is generally supplied to the military and state-run factories, but also finds its way to the markets through different avenues. The source reported that there is now more diesel fuel being circulated in the markets.
Also, see this on the general ease of smuggling conditions/border controls after the visit.
Full article:
Optimism rising as fuel prices dip in North Korea
Kang Mi Jin
Daily NK
2019-01-28
Tags: 2018 sanctions
