Rumours rife as gas restrictions in N. Korean capital drag on

PYONGYANG, Korea, Democratic People’s Republic Of — An acute shortage of gasoline in the North Korean capital of Pyongyang that has sparked price hikes and hoarding is raising fears of potentially crippling pain at the pumps if things don’t get better soon — and driving rumours that China is to blame.

The shortage, which is extremely unusual if not unprecedented, began last week when signs went up at gas stations around the city informing customers that restrictions on sales would be put in place until further notice. With no indication as of Wednesday night of when the restrictions might be lifted — or why they have been imposed — drivers continue to scramble to fill up their tanks and whatever other containers they can find.

Prices, meanwhile, have shot up. They had been fairly stable, typically at about 70-80 cents a kilogram, but on Wednesday at least one station was charging $1.40. Gasoline is sold by the kilogram in North Korean filling stations. One kilogram is roughly equivalent to one litre, so a gallon at the station costs about $5.30.

China supplies most of energy-poor North Korea’s fuel, and in lieu of official explanations, rumours are rife that Beijing is behind the shortage. The concerns are adding to a tense and uncertain mood on the Korean Peninsula since U.S. President Donald Trump assumed office with repeated calls for Beijing — Pyongyang’s economic lifeline — to get tough on North Korea, which has responded with counterclaims Washington is pushing for a nuclear war.

Though trade between North Korea and China appears to be solid, and possibly even growing, there are indications Beijing has been quietly tightening enforcement of some international sanctions aimed at getting Pyongyang to abandon its development of nuclear weapons and long-range missiles.

Limiting the oil supply has been openly discussed in Beijing as one option. Whether that is actually happening is unclear.

David von Hippel, a senior associate with the Nautilus Institute who specializes in energy and environmental issues, said supplies of crude oil and oil products would drop markedly without Chinese imports. But he stressed other factors could just as well be involved.

“The shortages and price rises being seen may be due to a combination of factors, including both actual shortages of products, more products being routed to other users — specific ministries, key factories, or the military, for example — and, or, more product being placed into government storage facilities,” he said in an email. “I do not have a sense, at present, of which of these options, and in what combination, is the driver for the price rises and sales restrictions.”

But two days after the restrictions were announced, North Korea’s state-run Korean Central News Agency carried an unusually acerbic, and even threatening, editorial denouncing “a country around the DPRK,” an obvious if not explicit reference to China. DPRK is short for North Korea’s official name — the Democratic People’s Republic of Korea.

“The DPRK’s nuclear deterrence for self-defence … is by no means a bargaining chip for getting something,” the commentary said, adding that if “the country” keeps applying economic sanctions “while dancing to the tune of someone … it may be applauded by the enemies of the DPRK but it should get itself ready to face the catastrophic consequences in the relations with the DPRK.”

It is unclear whether the gas shortage has affected North Korea’s military, state ministries and major projects, all of which get priority access to the state-controlled supply. But the North this month has staged a huge military parade, unveiled a sprawling high-rise residential district and on Tuesday conducted its biggest-ever live-fire air, land and sea military drill. It is also believed to be prepared to conduct what would be its sixth underground nuclear test.

Several chains of gas stations are operated under different state-run enterprises — some, for example, are operated by Air Koryo, the national flagship airline — and prices can vary.

North Korea gasoline customers usually purchase coupons at a cashier’s booth to fill up. Leftover coupons can be used on later visits until their expiration date. A common amount for the coupons is 15 kilograms (19.65 litres or 5.2 U.S. gallons).

The number of North Korean gas stations has grown steadily in recent years, mainly in Pyongyang, provincial capitals and along major highways. Pyongyang traffic has gotten significantly heavier since Kim Jong Un assumed power in late 2011. The greater number of cars, including swelling fleets of taxis, has been seen as an indication of greater economic activity.

Many of the vehicles are used for business purposes, such as transporting people or goods.

“When I last visited in 2005, they were filling up our bus with gas rations from buckets,” said Curtis Melvin, a researcher at the US-Korea Institute at Johns Hopkins University and a contributor to the 38 North website. “Things have definitely changed.”

Melvin added that the growth of an actual domestic market for gasoline has made it possible to see when there is a problem, since prices are posted at the gas stations, making trends publicly trackable. There is also less rationing than in the past.

If the apparent shortages are being caused by China, he said, the most likely explanation would be that less fuel is flowing across the border via pipeline.

Such a slowdown or stoppage would have an immediate impact on prices and would take time to compensate for by ships, trucks or trains. The primary place for North Korea pipeline storage tanks in China is in the border city of Dandong. But it was also not clear if North Korean tankers were picking up as much fuel as usual.