Fri, Sep 02, 2005 - Page 10 News List

Formosa stations in gas-price muddle

DESPERATE MEASURES When Chinese Petroleum Corp did not match price hikes by its rival, gas-station owners lost so much money that they're adjusting prices back

By Jessie Ho  /  STAFF REPORTER

Petrol stations selling Formosa Petrochemical Corp's oil products were deserted yesterday after gas and diesel price increases, combined with the effect of Typhoon Talim, while cars queued up at rival Chinese Petroleum Corp retailers across the nation yesterday to take advantage of their lower prices. It is not clear if and when Chinese Petroleum is going to raise its prices, prompting Formosa retailers to adjust back their prices to curb runaway losses.

PHOTOs: CHU JUN-YEN AND FANG PIN-CHAO, TAIPEI TIMES

Gas stations purchasing oil products from Formosa Petrochemical Corp (台塑石化) -- the nation's privately owned oil refiner who announced a 10 percent hike in wholesale prices as from Wednes-day -- decided yesterday to adjust back their prices with immediate effect, after seeing huge losses to competitors overnight.

"Our business have dropped by 67 percent because Chinese Petroleum Corp (CPC, 中油) did not match Formosa's price hike as it usually does," Kao Fu-lai (高福來), chairman of Formosa's gas station association, said yesterday after a provisional meeting of members.

The retailers have to absorb the extra costs themselves, as CPC did not change its wholesale gasoline prices, which added NT$2.4 to Formosa's gasoline products per liter, and NT$2 to diesel oil products per liter, Kao said.

But gas stations using Formosa Petrochemical's oil products only need to endure the extra costs for a few more days, as state-run CPC is widely expected to raise its wholesale rates within the next two days, Kao said.

Roy Chiu (邱吉雄), CPC's spokesman, refused to confirm any adjustments, saying an announcement will be made after a meeting to be held today.

As CPC supplies more than two-thirds of gasoline products in Taiwan and Formosa Petrochemical the rest, CPC is under a lot more pressure than its rival to hike prices now that the prices of oil futures are hovering at around US$70 per barrel, Kao said.

Refusing to reveal when and how much CPC will hike its wholesale gasoline prices, Minister of Economic Affairs Ho Mei-yueh (何美玥) yesterday merely promised that CPC will not raise its prices on the typhoon day.

Ho said that CPC has incurred a deficit of more than NT$3 billion last month and with global oil prices having surged by 60 percent from the last local price hike on Aug. 3, it has become necessary for the company to raise its rates to reflect costs.

The rising cost of gasoline has become a concern for the public and government officials, as it may introduce higher commodity prices and thus hurt the nation's economic growth.

The Directorate General of Budget, Accounting and Statistics last month said the nation's GDP growth is likely to increase slightly to 3.65 percent. But Academia Sinica has estimated that a 10 percent hike in oil prices will lower GDP growth by 0.27 percent.

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