Fuel prices won't rise, minister says

Chinese Petroleum Corp (中油) will not be allowed to raise its wholesale gasoline and diesel prices, unless the state-run oil refiner's rivals make the move first, a senior government official told lawmakers yesterday.

"Global crude oil prices are not expected to climb higher and exceed US$60 per barrel," Minister of Economic Affairs Ho Mei-yueh (何美玥) said at a legislative Finance Committee meeting.

"But even if global crude oil prices continue to rise, Chinese Petroleum won't take the lead in raising local prices," she said.

Ho made the remark after both Chinese Petroleum and rival Formosa Petrochemical Corp (台塑石化) last Thursday increased their wholesale gasoline and diesel prices by NT$1 per liter across the board.

The hike not only surprised many drivers but also raised eyebrows at the Fair Trade Commission, as the two companies' simultaneous price increase by the same increment invited allegations of price collusion.

The two refiners are facing increasing pressure from rising prices, with global crude prices having surged 25 percent to US$55 per barrel from US$42 in November.

During the same period of time, the NT dollar rose only about 10 percent.

As the hikes last week only reflected about 4 percent of the increase in their costs, the two companies may announce another increase in the near future. In this respect, Ho said the ministry has asked Chinese Petroleum's management to absorb the rising costs until its rival decides to raise prices.

Ho also said yesterday that the ministry will keep fees for utilities such as water and electricity unchanged for as long as bank prime rates are lower than the consumer price index, a criterion introduced by Premier Frank Hsieh (謝長廷).

But an appropriate price hike in utility fees will also help educate the public about the importance of conserving the nation's natural resources, Ho said.