State-run CPC Corp, Taiwan (CPC, 台灣中油) yesterday said it would not change the prices for its gasoline and diesel products this week, and there would be no price adjustments for liquefied natural gas and liquefied petroleum gas this month, as part of the government’s effort to stabilize domestic consumer prices.
The announcement comes as the company is expected to report a loss of about NT$8 billion (US$264 million) last month and more than NT$40 billion for the whole of last year because CPC has had to share the burden of high crude oil prices on the government’s instructions.
Rival Formosa Petrochemical Corp (台塑石化) also decided to follow suit out of fear of losing business in the market that the two firms dominate.
CPC said moderate growth in the US economy and rising tensions between Iran and the West over Tehran’s threats to close the Strait of Hormuz pushed global crude oil prices to high levels last week.
Under the company’s pricing mechanism, its average crude oil costs rose 0.44 percent to US$106.16 per barrel last week, from US$105.50 the previous week, which would have allowed it to raise gasoline and diesel prices by NT$0.1 per liter, CPC said in a statement posted on its Web site.
However, the refiner said it would absorb the increased cost to shield customers from market turbulence, leaving prices at the pump unchanged this week for the second consecutive week, CPC said.
Based on the company’s data, CPC has absorbed cost increases of about NT$3.4 per liter for gasoline and NT$3.3 per liter for diesel since December 2010.
Looking ahead, the company said global crude prices were expected to continue their upward trend this year and rise by between US$3 and US$5 a barrel, citing reports from the International Energy Agency and estimates by various advisory firms.
Meanwhile, CPC said its decision to freeze both prices for liquefied natural gas and liquefied petroleum gas was also made in accordance with the government’s efforts to combat inflation at a time when demand for fuel is high because of lower temperatures and the Lunar New Year holiday.
Based on the company’s pricing mechanism, household liquefied petroleum gas prices should have gone up by NT$1.7 a kilogram and the price of household liquefied natural gas should have gone up by 2.99 percent to fully reflect increased costs, CPC said in a separate statement.