Rising N. Korea gas prices put pinch on traffic in capital

Staff Writer
Columbus CEO

PYONGYANG, North Korea (AP) — Pyongyang drivers are feeling some pain at the pump as rising gas prices put a pinch on what has been major traffic growth over the past few years — and that might not be good news for the isolated country's shifting domestic economy.

An Associated Press review shows that after staying flat until the beginning of the year and then dropping through at least part of February, gas prices rose about 14 percent in March and remained at that level in early April.

The hikes come as North Korea is facing tougher international sanctions over its nuclear program and could have the trickle-down effect of putting a damper on what has been a significant rise in entrepreneurial activities in North Korea's nascent market economy.

The Associated Press has tracked gas prices in the capital every month since September. The survey was limited, sometimes just one gas-station stop per month, but official prices in Pyongyang are relatively uniform.

North Korean officials don't discuss such things openly, so it is difficult to say conclusively why the gas prices have gone up.

It could simply be the result of having more vehicles on the road, meaning more demand. Prices for other commodities sought after by the increasing number of residents in the North Korean capital with some extra cash in their pockets have also been on the rise — including food and drinks at restaurants, another growth market.

It's possible the prices reflect a blip in exchange rates or a seasonal increase, or that more fuel is being diverted to the military or priority construction and development projects, or to strictly official vehicles as Pyongyang prepares for a major ruling party congress next month. Concern over disruptions caused by the impact of the sanctions — and particularly the stability of imports from China, where most of the gasoline supply comes from — might be part of the mix.

In any case, fear that prices will keep going up is high enough that some vehicle operators in Pyongyang have started hoarding coupons for future use.

Buying gas in North Korea is in itself a unique experience.

Before going to the pumps, customers generally buy coupons at the cashier's booth good for the amount of fuel they want to purchase. For some obscure reason, gasoline is sold by the kilogram, not by the liter. A common denomination for the coupons is 15 kilograms (19.65 liters or 5.2 U.S. gallons). One of those coupons now costs about $12 in Pyongyang. That's almost $2 more than February prices, and the equivalent of $2.29 per gallon.

And yes, even North Koreans pay in dollars, or euros. Though the official price for one kilogram of gas is currently about 80 North Korean won, no one actually pays that. Eighty won is worth about 80 U.S. cents under the official exchange rate, but only about eight-tenths of a cent under the unofficial exchange rate most North Koreans use when buying and selling things among themselves — the "real economy," in other words.

Supply is controlled by the state. The military, state ministries and priority projects get first dibs. But there are several "chains" of gas stations that operate under the auspices of different government entities. Official prices are fairly uniform in Pyongyang, but cost and quality can differ depending on which outlet you go to — particularly if you buy on the black market, where gasoline is sold surreptitiously in cans at stalls.

Military and public transportation such as street cars and buses are still kings of the road. But the number of passenger cars has mushroomed, and they are increasingly middle-class models made in China rather than the typical black limousines or blue Mercedes sedans used by senior party officials. There also are many more taxis on the roads; they are metered, but a flat fee for a cross-town ride of about $4 is common if a foreigner is paying.

Traffic is heavier than in years past, when visitors to Pyongyang were often struck by the emptiness of its broad avenues. Pyongyang's iconic traffic controllers, usually young women in distinctive blue uniforms who serve as human traffic lights, seemed to be there just for show, having virtually no traffic to control. In reality, their jobs were as much about keeping watch on who's driving, and when, and what they might be carrying.

Now, however, the women are called on more often to actually manage traffic, and even an occasional traffic jam. And they have more mechanical help: Pyongyang has more traffic lights and surveillance cameras these days.

The growth in traffic in the capital is a visible indicator of economic activity the North generally prefers to keep under wraps.

Many vehicles these days are clearly being used in an entrepreneurial style, moving people and goods around for a fee. They have the tacit or sometimes explicit support from the government to develop what for all intents and purposes is a small-scale but capitalist-style market economy, though officials are loath to call it that.

Higher gas prices could put a damper on such activities, or at least cut into their profits.

The rise of automobiles is focused on the capital, which remains a very special place. Most North Koreans don't have cars, or even access to cars.

The ones who do can consider themselves lucky. In the countryside, major highways are still not very well traveled and often not even paved. And gas, when it's available, is usually more expensive.