CPC may buy oil products if necessary

The state-run CPC Corp, Taiwan (CPC, 台灣中油) said yesterday that it may purchase gasoline and diesel oil products from the spot market when necessary, as demand for the company's relatively cheaper oil products compared to those from its rivals was surging.

A lot of customers have switched to filling their gas tanks at CPC gas stations, after Formosa Petrochemical Corp (台塑石化), the nation's only publicly traded oil refiner, raised its wholesale gasoline and diesel prices by NT$2.8 and NT$3.1 per liter respectively on Saturday.

"CPC's average daily sales have increased by 26 percent since Formosa Petrochemical raised its wholesale gasoline and diesel prices [last Saturday]," Liao Tsang-long (廖滄龍), a deputy director of CPC's industrial relations division, said by phone yesterday.

When asked whether the increasing customer demand would pose a threat to its fuel supply, Liao said that aside from 95-octane unleaded gasoline, CPC's fuel supply should be sufficient to meet the growing demand.

Furthermore, the company will adjust its production capacity to solve the problem.

Nevertheless, he said the company did not rule out the possibility of buying oil products from the international spot market if it ran out of its current stocks, although he said it still had a two-month supply in storage.

Despite the pressure of rising international crude oil prices, CPC yesterday reiterated that it won't raise its fuel prices in order to fulfill the government's policy to prioritize fuel supply for the domestic market.

In addition to CPC-owned gas stations, its largest retailer, Taiwan Youni (台灣優力), which owns 120 gas stations nationwide, said yesterday that its average daily sales had grown by 50 percent over the past four days.

The government in November imposed a ceiling on the state-run refiner's prices after inflation rose to a 13-year high.

But several academics have urged the government to resume a floating oil price mechanism with supplementary measures.

Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), said the government should lift price caps on fuel prices, but help people who cannot afford the price increase by subsidizing public transportation.

Prior to last week's price hike, CPC controlled about 75 percent of Taiwan's gasoline and diesel market, while Formosa Petrochemical had the remainder .

CPC may post a total loss of NT$110 billion (US$3.6 billion) this year if fuel prices remain unchanged, after a loss of NT$22 billion in the first three months, the company said it estimates.

The refiner reported a profit of NT$11.8 billion last year, the Web site of Taiwan Stock Exchange showed.

Crude oil in New York has climbed 5.7 percent this year.