Pyongyang gas price surge: Bad news for Kim Jong Un?

Cause and extent of surge remains a mystery

TOKYO, May 25, (AP): While world attention has focused on Kim Jong Un’s recent missile tests, a month-long surge in gasoline prices in Pyongyang is showing no signs of letting up — a puzzling problem that if allowed to drag on could be very bad news for the North Korean economy.

Prices have shot up to about $2.30 per kilogram, or about $6.44 a gallon, since the surge began in mid-April, when prices were in the $1.25-30 range. That means North Korea now has some of the highest prices in the world for gasoline. For comparison, the price in April last year was only about 80 cents per kilogram.

The cause and extent of the surge remains a mystery.

Officially, there has been no comment. There’s no obvious sign of less traffic on the streets, at least in Pyongyang, which is more affluent and developed than other North Korean cities. Taxis appear to be operating normally and have not raised their fares.

The North’s by now pervasive market economy, which is tolerated by the ruling regime in exchange for its own cut of the profits, has made fuel and the ability to transport goods and people so essential that demand for gasoline is not so sensitive to price.

But many gas stations around the capital, if they are selling fuel at all, have been limiting who they sell it to and how much each customer can buy. The long queues and mad dashes to fill gas tanks and large plastic storage cans that marked the beginning days of the surge appear to have subsided, though stations’ operations remain irregular and unpredictable.

North Korean gas stations generally belong to chains associated with large government enterprises or sometimes the military. Gas is also sold through more informal channels, including street-side stalls and the black-market. It is sold by weight in North Korea — thus the “per kilogram” rates.

Without official confirmation or data, it’s hard to conclusively say what is going on. Prices also tend to fluctuate from station to station.

Several possible scenarios could be in play.

It was rumored last month that China had or was about to limit exports. That possibility, hinted at in a tabloid newspaper associated with China’s ruling party, could have set off the surge either because of an actual drop in supply or speculative buying in anticipation of a shortfall.

The incentive to hoard remains because of rumors Beijing will implement sanctions if Pyongyang conducts a nuclear test. It is unclear how informed North Koreans are about the possibility of another test soon, but satellite imagery widely reported abroad suggests one could come at any time.

The North Korean government itself might have pulled some of supply out of the market. In this photograph taken on May 22, 2017, Indian passengers watch television screens onboard the Tejas Express luxury train during its first journey between Mumbai and Goa in Mumbai. India’s passenger trains are often known for being rickety and spartan but a new service that started running this week, boasting WiFi and ‘in-rail’ entertainment, hopes to change all that. On the luxury Tejas Express, gone are the ubiquitous tea sellers and samosa vendors who sell snacks to hungry travellers through the open windows of regular trains during platform stops. (AFP)