State-owned oil refiner CPC Corp, Taiwan (CPC, 台灣中油) announced yesterday that domestic oil prices will remain at their current levels and that the company would absorb rising gasoline and diesel costs, which are predicted to increase by NT$0.5 per liter and NT$0.6 per liter respectively this month, based on the current floating oil price mechanism.
“CPC’s decision was in light of the two typhoons [Tropical Storm Kalmaegi and Typhoon Fung-wong] that hit the nation last month; a lot of families are still struggling to rebuild their homes and the company feels the public’s pain and is willing to absorb the rising costs,” CPC vice president Chu Shao-hua (朱少華) said at a press conference yesterday.
CPC will have to absorb an additional NT$600 million (US$19.58 million) in losses per month as a result of the decision, Chu said.
PHOTO: CHANG CHIA-MING, TAIPEI TIMES
Following CPC’s announcement, Formosa Petrochemical Corp (台塑石化), the nation’s only privately-owned oil refiner, also announced on its Web site that it would not adjust its domestic gasoline and diesel prices.
But the two may still have to adjust their wholesale prices a week from now, because the Ministry of Economic Affairs announced last night that beginning this month, the floating oil price mechanism will be revised to adjust domestic oil prices on a weekly basis, rather than the current monthly revision.
In other words, the next adjustment of domestic oil prices will be announced on Friday, Aug. 8 at 5pm, with prices effective on Saturday at midnight.
“This seems like a smart move, but the question remains whether it [CPC} will follow the rules of the game [and adjust domestic oil prices this month],” Liang Chi-yuan (梁啟源), a research fellow at Academia Sinica’s Institute of Economics, said about CPC’s decision in a telephone interview yesterday.
Despite this, Liang said he could sympathize with the government, as it is under pressure not to increase oil prices this month.
The Taipei-based Consumers’ Foundation (消基會) said yesterday that it was glad to see the government has begun to pay attention to public opinion.
However, the foundation said the real problem was not whether oil prices should be adjusted on a monthly or weekly basis, but rather that the current floating oil pricing formula is too simple.
“It is only a short-term solution … I do not think this is a good resolution. The government tried it before [last year], but it failed,” acting foundation chairman Hsieh Tien-jen (謝天仁) said by phone yesterday.
Meanwhile, domestic new car sales declined 30 percent from a year ago to around 23,000 units last month, a Hotai Motor Co (和泰汽車) official said yesterday.
“People have become more cautious on spending their disposable income, especially for goods such as cars that require a large amount of money,” Steven Yang (楊湘泉), a Hotai spokesman, said by phone.
The company has not seen any signs of optimism as of yet and predicts that the nation’s new car sales this year will drop to 250,000 units, down 21.88 percent from 320,000 units last year, Yang said.
href="ExxonMobil profit hits record on oil price surge">http://www.taipeitimes.com/News/worldbiz/archives/2008/08/02/2003419188
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