CPC empowered to change fuel prices

This article was written by Susan Yu and published by the Taiwan Journal on February 17, 2006. It reports that the government in Taiwan recently authorized the state-run Chinese Petroleum Corp. to determine when and how to adjust its gasoline prices. The company immediately put up its gasoline and diesel oil prices by as much as 4.18 percent. Taiwan's only other fuel supplier, the privately run Formosa Petrochemical Corp., also raised its fuel prices.

The fuel price change is the first since October 2005, when the government ordered a freeze on the state-run company's gasoline and diesel wholesale prices until the end of that year. At that time, the government also ordered a reduction of commodity taxes on petroleum products in order to help Taiwan's small and medium enterprises cope with the rising fuel prices.

Representatives from the Chinese Petroleum Corp. said that the fuel price change will help recoup only a small part of losses sustained as the consequence of not raising its prices in step with skyrocketing crude oil prices in recent months. While international crude oil prices have shot up by 60 percent since January 2005, the company's current gasoline prices reflect a much smaller 12-percent increase. The company lost as much as US$99 million in January 2006 alone.

Although the Chinese Petroleum Corp. is no longer required to receive approval from the government before any change of fuel prices, the company's operation is still monitored by the Ministry of Economic Affairs in order to protect the public's interests.