Foundation demands cuts to gas prices

The Consumers' Foundation (消基會) yesterday urged the nation's two oil refiners to lower gasoline prices to reflect the falling prices of crude oil, but the two oil suppliers said they have no plans to do so.

State-run Chinese Petroleum Corp (CPC, 中油) and the private Formosa Petrochemical Corp (台塑石化) hiked wholesale gasoline prices three times this year, lifting the rate by NT$4 per liter from last year, the foundation said in a statement released yesterday.

"CPC and Formosa Petrochemical raised the pump prices again and again, telling the public that the companies are losing money from surging oil prices. But when the prices are sliding, we don't see them propose any price cuts," the foundation said.

The price of crude oil hit a historic peak of US$77.23 per barrel on July 14, and has since tumbled by 15 percent to US$65.85 per barrel on Monday, the foundation said.

West Texas Intermediate (WTI) crude oil futures were around US$75 per barrel when CPC and Formosa hiked the gasoline prices the last time in July. The WTI for delivery next month closed down US$0.64 at US$65.61 per barrel on Monday.

As a wholly government-owned refinery, CPC is under the control of the Ministry of Economic Affairs, which in February set six principles as a guideline for CPC to adjust gasoline prices.

The foundation said that the firm was ignoring one of those principles, which was to "lower the rates in time when international oil prices fall."

"Although the price of crude oil has dropped, our costs are still higher than our retail prices," Liao Tsang-long (廖滄龍), deputy director of CPC's public relations division, said in a phone interview.

"We have not yet fully passed on those costs to wholesale prices," Liao said.

For the first eight months of the year, CPC accumulated a loss of NT$25.4 billion (US$771.71 million), Liao said.

CPC will closely watch the fluctuation of oil prices, which may rise again in the winter, he said.

Minster of Economic Affairs Steve Chen (陳瑞隆) said that while gas prices would be set by the market mechanism, the government would work to keep Taiwan's gasoline prices the lowest among neighboring Asian countries in order to retain competitiveness and ease consumer prices.

For the first eight months of the year, the nation's consumer prices climbed 1.10 percent from last year, with transportation costs -- mainly pump costs -- up 2.12 percent from a year earlier, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported on Sept. 5.

But Chen said that both the Bureau of Energy and CPC were drafting a new mechanism for oil prices, which they hoped to conclude soon and announce to the public.

Private rival Formosa Petrochemical, which sells 70 percent of its gasoline to overseas markets, also has no plan to cut its wholesale prices despite declining crude oil prices, said Matiz Lin (林明憲), a company public relations official.

Formosa Petrochemical saw sales increase 31.97 percent to NT$55.78 billion for the first eight months of the year.