CPC cuts gas, diesel prices again

The state-run Chinese Petroleum Corp (CPC, 中油) yesterday announced an NT$0.9 per liter reduction in the wholesale prices of gasoline and diesel from midnight last night.

After the price adjustments, the retail price for 98-octane unleaded gasoline will be NT$28.7, 95-octane gasoline will be NT$27.2, 92-grade will be NT$26.5 and top-grade diesel oil will be NT$23.3 per liter.

This is the second time the nation's largest oil refiner has cut domestic pump prices on gasoline this year after three hikes in the past few months raised prices by NT$4 per liter. On Sept. 14, it cut gasoline rates by NT$0.5 per liter and those of diesel oil by NT$0.3 per liter.

"We hope gasoline rates can comply with the free market mechanism and fluctuate with international prices," Minister of Economic Affairs Steve Chen (陳瑞隆) told a press briefing.

Prices of West Texas Intermediate (WTI) crude oil for October delivery last Friday, the latest figures available, were lower than those on Sept. 14 by 5.15 percent, a range to be matched by CPC's price reduction starting at midnight, he said.

The "trial" pricing model, based on WTI rate fluctuations every seven days, is expected to become the norm until the end of this year, with gasoline price adjustments announced every Tuesday, Chen said.

The ministry and CPC will be reviewing and fine-tuning the pricing mechanism before a formal fluctuating pricing scheme starts next year, Chen said.

Meanwhile, subsidies granted to taxi drivers and the public transport sector since July 7 will be revoked as gasoline prices have been reduced by more than NT$1 per liter, he said.

Private competitor Formosa Petrochemical Corp (台塑石化) said it would carefully evaluate CPC's pricing strategy and had scheduled meetings today to formulate a response, according to a text message sent to reporters yesterday.

The Consumers' Foundation (消基會), however, said that CPC's price adjustment was not enough.

Cheng Jen-hung (程仁宏), the foundation's vice chairman, said retail prices should be slashed by NT$2.5 per liter, rather than NT$0.9, as international crude prices have been spiralling downward.

CPC has been lukewarm toward reducing gasoline rates, citing corporate losses. For the first eight months of the year, the firm accumulated a loss of NT$25.4 billion (US$769.7 million).

Cheng said CPC should take responsibility for its poor performance, rather than passing costs onto consumers.