In the late 1990s, as the turn of the millennium sparked a mix of anticipation and uncertainty, the number of gas stations in Seoul peaked at 819 by the end of 1999. This surge was fueled by the lifting of regulations that had previously limited the establishment of new stations, coinciding with the rapid growth of South Korea’s vehicle market, which approached 10 million registered cars during the mid-1990s. However, by the close of last year, the number of gas stations in Seoul had dwindled to 427—nearly half of the 1999 figure. Nationwide, the total fell below 11,000 for the first time in two decades, despite the registration of approximately 1.64 million new vehicles nationwide, including 175,800 in Seoul.
The once-lucrative image of gas station ownership has long since faded. Fierce competition within the sector has deepened financial challenges. The rise of hybrid vehicle sales—nearing parity with gasoline-powered cars—and the increasing popularity of electric vehicles, which now outpace diesel models, have further clouded the outlook for gas stations. While some operators have turned to self-service models or diversified their operations, such measures are seen as temporary fixes rather than solutions to the industry’s long-term decline.
According to data from the Korea Petroleum Quality & Distribution Authority, Korea National Oil Corporation, and Korea Oil Station Association, the number of gas stations nationwide decreased by 1.3% year-on-year, or 148 stations, to 10,875 as of Dec. 31. This marked the first time since 2004—when the figure stood at 11,123—that the total dropped below 11,000.
The proliferation of gas stations began in the early 1990s with the rise of private car ownership, starting from just 3,000 stations nationwide. Growth accelerated after distance restrictions between stations were abolished in 1995, followed by the deregulation of oil prices in 1997. Double-digit annual growth pushed the total past 10,000 in 1998, eventually peaking at more than 13,000 by 2010.
However, concerns over market saturation soon emerged, triggering a steady decline in the industry. Intense competition slashed profit margins, forcing many stations to close. At its height, over 250 stations shut down annually, while even slower years saw around 100 closures. A Korea Oil Station Association official noted that in the early 1990s, gas stations enjoyed average operating profit margins of 18%. By the mid-2000s, after the number of stations exceeded 11,000, margins had dropped to around 4%. By the 2010s, margins had fallen below 1%, pushing the industry into critical territory.
As competition intensified, consumer behavior shifted. The widespread adoption of smartphones enabled drivers to compare fuel prices in real time, sparking a price war among gas stations. Margins shrank further as prices flattened, and rising minimum wages for part-time workers compounded profitability challenges.
Urban areas, where land is more valuable, have seen the sharpest declines. For example, Busan’s gas station count fell from 506 in 2010 to 346 by the end of last year, while Daegu’s dropped from 459 to 350 during the same period. An industry representative explained that in prime urban locations, converting a single-story gas station into a multi-story commercial property is often more profitable.
Adding to the challenges are environmental cleanup costs associated with decommissioning gas stations, which deter some owners from shutting down. Industry estimates indicate that only about 10,000 stations nationwide are operating under normal conditions. Shim Jae-myung, an executive at the Korea Oil Station Association, stated, “The average closure cost for a gas station is approximately 100 million won ($83,000), leading some operators to maintain intermittent operations. We estimate that there are around 900 to 1,000 such stations nationwide.”
