It might be worth reviewing whether the formula used to calculate fuel prices should reflect freight costs, Sean Chen (陳冲) said yesterday in response to claims that big freight savings had not been passed on to consumers.
The Chinese-language Liberty Times (the Taipei Times’ sister newspaper) reported that state-run CPC Corp, Taiwan (CPC, 台灣中油) was “hiding” plunging international ocean freight costs to prevent them from being reflected in lower prices at the pump.
According to the report, international freight prices for oil have plunged nearly 75 percent over the past four years from US$20 per tonne in 2008 to US$5 per tonne today, giving CPC NT$9 billion (US$300 million) in savings on freight this year alone — which means fuel prices per liter should be reduced by NT$0.7.
CPC said in the report that those figures were on the high side because they did not account for fluctuations in ocean freight costs, but it acknowledged savings per liter of about US$0.01 or NT$0.3.
Fuel prices in Taiwan are adjusted weekly based on a weighted formula of 70 percent Dubai crude prices and 30 percent Brent crude prices, but it does not include freight costs.
Whether freight savings could be included in the formula was open to review, the premier said. However, the public should not see the formula for domestic gasoline prices as favoring the oil companies, because private companies have opted to export their gasoline rather than sell it at home for the designated price, he said.