North Koreans Hoard Oil Amid Sanctions, Pushing up Gas And Diesel Prices

Individuals and businesses that generate foreign currency are selling what they stockpile at high profit margins.

North Korean commuters ride a public bus during evening rush hour in Pyongyang, Sept. 28, 2016.

The extreme stockpiling of fuel in North Korea has caused oil prices there to skyrocket, raising suspicions that wealthy people and businesses that generate foreign currency are manipulating prices by hoarding gasoline and diesel supplies, local sources said.

Those dependent on some form of transportation to make a living, such as fishermen and cross-country drivers, have been hit hard by restrictions on fuel-oil exports from China as part of wider sanctions against North Korea, they said.

The sanctions were put in place earlier this year to punish North Korea for recent missile launches and nuclear tests. China claims to be enforcing United Nations sanctions in what observers say is a departure from Beijing’s past practice of largely turning a blind eye to trade with North Korea.

The shortage of gasoline and diesel can be attributed to North Korean trade and transportation companies that generate foreign currency for the cash-strapped regime of dictator Kim Jong Un, sources said.

“As China imposes sanctions against North Korea, the price of gasoline and diesel has skyrocketed,” said a source in North Hamgyong province which borders China. “Drivers are trying to procure gasoline and diesel before the price goes higher, and that is pushing prices up.”

“Small fishing vessels need gasoline, and big fishing vessels need diesel,” said the source, who declined to give his name. “Moreover, it is now farming season, and gasoline and diesel prices are rapidly increasing,” the source added.

Collective farms have been collecting money from farmers to purchase oil for machinery, and drivers of service cars that provide long-distance travel have started collecting an additional 10,000 North Korean won (U.S. $1.40) from customers for every military checkpoint they cross, he said.

Another source in North Hamgyong province said oil prices began to rise in early May, and the price has now nearly tripled compared to the same time last year.

As oil prices have abruptly increased, wealthy North Koreans or Chinese living in the country and foreign currency-generating organizations have been hoarding gasoline and diesel to sell at a high profit margin, said the source who requested anonymity.

“When fishing vessels return from fishing in the ocean, there are so many people waiting at the dock to buy oil,” he said. “It's because fishing vessels usually barter freshly caught fish for gasoline and diesel from Chinese fishing vessels.”

The price of Buheung or Samma fuel oil in Chongjin, capital of North Hamgyong province and the country's third-largest city, was four yuan (U.S. $0.60) per kilogram the same time last year, while and the price of diesel was two yuan (U.S. $0.30) per kilogram, he said.

Now the price of gasoline is 12 yuan (U.S. $1.75), said the source, who requested anonymity.

Many North Koreans are finding the increase hard to swallow because workers typically earn less than a dollar day in their official jobs, though they can pull in extra income by working in local markets and performing labor.

“The crude oil price increase is absurd because there is still oil stocked up from last year’s oil imports from China,” the source said.

“The price of oil has skyrocketed not because there is no oil to use at the moment, but because everyone is hoarding it for future use,” he said.

Reported by Jieun Kim for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Roseanne Gerin.