This empirical study analyzed the policy effect of deregulation in oil product prices. To investigate the effect of deregulation, it is tested whether gasoline prices are determined by market power. Also, the role of government in gasoline tax system is investigated. The empirical analysis has been done by using error correction model. The major findings are as follows. First of all, no significant empirical evidence is found to support that the deregulation affects the determination of gasoline prices. Secondly, the short-term CIF elasticity is estimated to be 0.14. This finding implies that if CIF increases 10%, the gasoline prices increase 1.4%. Finally, the investigation on government role in deregulated market shows that the government has still exercise the power of control through the tax system. For example, the government is seemed to increase the gasoline price more than the increase amount caused by the international oil prices and the exchange rates, because of the intention to achieve the internal revenue increases and lead to gasoline conservation.