Abstract
South Korea relies on imports for most of its oil consumption, but its oil refining industry has grown into one of the most important national industries and ranks fifth in the world in terms of refining capacity. This study seeks to examine the export competitiveness of the South Korean oil refining industry over the period 2000–2019. To this end, an analysis of the trade specialization index, the revealed comparative advantage, and the 2 × 2 matrix of these two measurements is carried out. The results show that automobile gasoline, jet oil, and lubricant oil belonged to the ‘high competitiveness group’ for the entire period, whereas naphtha belonged to the ‘import-specialized group with comparative advantage’ for the entire period. Finally, aviation gasoline, bunker A oil, bunker B oil, and bunker C oil fluctuated between the ‘low competitiveness group’ and the ‘export-specialized group with comparative disadvantage’. To enhance the export competitiveness of the oil refining industry, this research suggests reorganizing the irrational tax structure and actively utilizing by-products generated during the refining process.
Highlights
The global oil refining industry is facing various changes in the policy environment
This study aims to analyze the export competitiveness of the South Korean oil refining industry by using import and export data from 2000 to 2019
A comprehensive analysis of the competitiveness of each petroleum product using a 2 × 2 matrix of the trade specialization index (TSI) and the revealed comparative advantage (RCA) index shows that diesel, automobile gasoline, jet oil, and lubricant oil belonged to the ‘high competitiveness group’ for the entire period, whereas naphtha belonged to the ‘import-specialized group with comparative advantage’ for the entire period
Summary
The global oil refining industry is facing various changes in the policy environment. The regulation of the International Maritime Organization, called IMO 2020, requires a reduction in the sulfur content of fuel oil from 3.5 to 0.5% or less for all ships operating international routes from 2020 [1]. Considering that the global demand for marine fuel accounts for 7% of the total oil demand, and 50% of the world demand for high sulfur oil is for ships, the change in demand for oil is expected to be large following the introduction of IMO 2020 [2]. Policies for the dissemination of eco-friendly vehicles are causing major changes in the oil refining industry. The European Union imposes fines on automakers when they exceed the average CO2 emission target, and credits companies that make a high proportion of vehicles with emissions of 50 g of CO2 per km or less
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