The era in which securing crude oil alone guaranteed energy security has ended. After suffering from crude oil supply shortages following the Middle East war, the world is now staking its survival on securing diesel (gas oil). The United States pressured France and Germany to release their strategic diesel reserves and even warned of a ban on U.S. diesel exports. Sanctions on Russian diesel were also temporarily eased. China likewise temporarily suspended petroleum product exports in early this month. In an energy war without gunfire, diesel is emerging as a new weapon.
The problem is that the diesel shortage will not be resolved even if the crude oil supply chain recovers. Middle Eastern crude oil exports are being compensated for through alternative shipping routes, but the scarcity of petroleum products persists. In fact, the global shortfall in petroleum product supply stands at approximately 6 million barrels per day. This is due to operational disruptions at refineries in the Middle East and Russia, compounded by the reduction of refining capacity in major countries. Even with crude oil available, there is a lack of refining capacity to convert it into petroleum products.
Europe is paying the price. Citing decarbonization efforts and deteriorating profitability, Europe has closed 30 out of approximately 100 refineries since 2009. Refining capacity also decreased from 17.5 million barrels per day to 14.4 million barrels per day last year. Relying on imports for insufficient petroleum products has exposed vulnerabilities in the supply chain. In contrast, China, which has expanded its refining capacity, is securing domestic volumes while even adjusting export levels. Refining capacity has become an energy breakwater and a means of exerting influence in international markets.
Korean refineries also warrant re-examination. Although Korea imports virtually all of its crude oil, it possesses world-class refineries in Ulsan, Yeosu (South Jeolla Province), and Daesan (South Chungcheong Province). The country's four major refiners exported over 200 million barrels of diesel last year alone, leveraging refining capacity that exceeds domestic demand. This is a competitive advantage secured through refining technology and equipment investment by a resource-poor nation. It also explains why Korea has been able to maintain both domestic supply and exports amid the global shortage.
The ability to efficiently process increasingly diverse oil grades and produce petroleum products essential for supply chain crises is becoming true energy security. This is why efforts must be made to expand refining capacity. While maintaining stable transactions with the Middle East, urgent equipment investment is also needed to flexibly utilize non-Middle Eastern crude oil from regions such as the United States, Africa, and Latin America.
Above all, the government's role is crucial. The price cap system must not remain a simple form of price control. An environment must be created where companies can continue equipment investment by compensating for losses incurred due to policy implementation. This is because, in the next crisis, refining competitiveness—the ability to produce oil—must accompany price controls. We must prepare in advance for an era where diesel, and ultimately refining capacity, becomes a weapon.
in INDUSTRY
