Number of Self-Service Gas Stations soaring in Korea

Hyundai Oilbank, the nation's fourth-largest refiner, opened its latest self-service station last week in southern Seoul, by remodeling a full-service station.

It plans to build some 20 more similar ones this year, adding to its 28 self-service stations already in operation. Previously to this year, there were only 13 stations that had self-fueling. "Self-service filling stations can save labor and management costs, and benefit customers with reduced fuel charges," a spokesman of the refiner said.

GS Caltex also said it will ride on the trend even further with the aim of expanding the number to 200 this year. The company, which started the business in 2005, currently runs the most self-service gas pumps here with 142.

Only 2 percent of local gas stations are currently operated this way, while the proportion surpasses 80 percent in the United States. However, industry forecasts the number will continue to grow with better profitability. Switching to self-service can generally create 20 to 30 percent more sales, industry watchers say, adding that it is mainly attributable to the price edge.

Hyundai Oilbank's self-service stations sell fuel 40 to 100 won (3 to 9 cents) cheaper per liter than at their other stations.

The growing number of self-service stations backs the analysis. While there were 150 nationwide in 2008, the number has nearly doubled to 280 now.

Self-service gas stations were first introduced in South Korea in the mid-1990s as refineries braced for the liberalization of oil exports and imports. At that time, however, they didn't appeal to local motorists unfamiliar with such a system. With the turn of the decade, however, oil firms have focused more on them as prices started to surge.

They also helped other businesses make inroads into the industry. Since 2008 when E-mart became the first major retail company to switch to operating gas pumps, others have joined in and adopted the self-service system.

Last month, a provincial branch of Nonghyup, the nation's agricultural group of cooperatives, also opened one with its own brand of "NH-Oil."

Individual gas station owners are worried that the trend could further erode their business as overall costs are prohibitive for individual operators to switch to self-service. "A self-fueling machine costs up to 30 million won. This means most self-serve gas pumps will be built by major business owners," an official of the Korea Oil Station Association said.