After weeks of histrionics, government denials, much grumbling and foot stomping from the public and consumer groups and a public warning shot across the bow from President Chen Shui-bian (
The ministry also promised to come up with a new system for setting prices within two weeks.
But finding a formula that keeps the public happy while remaining feasible and profitable for CPC, Taiwan (CPC) is going to be difficult, to say the least.
The floating mechanism had been in effect for just under a year and adjusted gasoline prices based on 80 percent of the change in the price of West Texas Intermediate crude oil traded on the New York Mercantile Exchange.
In that time, oil prices have risen by about 30 percent and industry analysts quoted recently in the New York Times expect them to continue rising for the time being.
If prices do continue to rise and CPC is expected to foot the bill without passing on the costs to motorists then one would assume it will be extremely hard for it to stay profitable.
Surely the public must understand that any state-run company that makes a loss has to be propped up using taxpayer money, meaning that everyone foots the bill -- even those who do not own cars. Therefore, reflecting the cost of rising oil prices in the price of gasoline would seem to be the fairest way.
It is hard to see how the ministry can come up with a better scheme.
The reality, however, is that people just do not want to pay more for their fuel, but rising oil prices are not just a Taiwanese phenomenon.
Global demand for oil is rising exponentially as emerging economies vie for new and existing supplies. The International Energy Agency has said that global oil consumption for this year will reach 86 million barrels a day, 1.5 million barrels more than last year. Meanwhile, global production has peaked in more than 50 countries and the rate of discovery of new oil fields has slowed to a trickle.
The notion that people can continue paying the bare minimum for gasoline would therefore seem to be pure folly.
Taiwan already has some of the cheapest gas prices in the developed world and even the current price of around NT$30 per liter amounts to less than half of what motorists in many Western European countries pay.
Such unrealistically low gas prices give the public a false sense of security and encourage wasteful behavior. Pump prices that more accurately reflect the real cost of fuel would cause motorists to be more prudent, benefiting not only their pocketbooks but also the environment.
A floating pricing system of some sort is therefore the best alternative.
The government is clearly keeping one eye on the upcoming elections. But if prices keep rising, as predicted, the decision will only make for a more painful price hike later on.
A seemingly more reasonable system may temporarily placate public disquiet. But whatever mechanism the government comes up with, the public must realize that the global economy runs on oil. Whether or not they pay for it at the pump -- through more expensive commodities or through taxation -- there is no hiding from sky-rocketing oil prices.