Minister of Economic Affairs Shen Jong-chin (沈榮津) yesterday said the ministry is planning a new fuel pricing mechanism to help mitigate the effects of rising global crude oil prices on consumers.
Under the proposed mechanism, CPC Corp, Taiwan (CPC, 台灣中油) would absorb part of cost increases if oil prices reach a certain level, Shen said at a meeting of the legislature’s Economics Committee.
CPC currently calculates its weekly fuel prices based on a floating pricing mechanism, with a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude.
The state-owned refiner has raised fuel prices for three consecutive weeks because of rising crude oil costs, pushing domestic prices of gasoline and diesel to their highest levels in three-and-a-half years.
The ministry is still drafting details of the new pricing formula and would submit a report to the Executive Yuan in the coming weeks, Shen said, without elaborating.
Shen’s remarks came in the wake of media reports that the ministry would set price ceilings and floors in the new pricing mechanism to ease the impact of fluctuating global crude oil prices.
The Chinese-language Economic Daily News reported that if the price of 95-octane unleaded gasoline reached NT$32.5 per liter, CPC might absorb half of the increase in fuel prices, with consumers paying the other half.
If the price climbs to NT$35 per liter, CPC and consumers would each shoulder one-third of the increase, with the government absorbing the rest by lowering commodity taxes, it said.
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