Following yesterday's decision by the state-run Chinese Petroleum Corp (CPC) to add NT$2 per liter to the prices of wholesale gasoline and diesel oil, Formosa Petrochemical Corp, the nation's second-largest oil refiner, announced yesterday that it would match the price rise.
The announcement led to long lines of vehicles forming at Formosa Petrochemical gas stations before the new rates went into effect at midnight yesterday, one day later than CPC.
"The hike should be more than NT$3 to fully reflect our costs, but we decided to adopt CPC's rates when considering market competition factors," Su Chi-yi (蘇啟邑), vice president of Formosa Petrochemical, said yesterday.
Light, sweet crude for May delivery dropped by US$0.40 to US$70.95 a barrel in Asian electronic trading on the New York Mercantile Exchange yesterday, after it reached a record of US$71.35 by close of business on Tuesday.
Going against the trend, the 68 gas stations run by state-run Taiwan Sugar Corp will not raise their retail prices until tomorrow, the company said in a statement.
Nevertheless, the CPC and Formosa Petrochemical's record high price hikes, by an average of 8 percent, have triggered inflation concerns.
According to estimates from the Directorate-General of Budget, Accounting and Statistics, the nation's consumer price index (CPI) will rise by 0.385 percent if gasoline price rise by 10 percent.
The CPI for the first quarter of the year has risen by 1.35 percent from a year earlier.
With the gasoline price hike, along with possible hikes in electricity fees, the price of long-haul bus and taxi fares and various consumer goods, the CPI may exceed the 2 percent-mark set by the Council for Economic Planning and Development (CEPD).
With surging fuel costs, the Minister of Economic Affairs Morgan Hwang (黃營杉) said yesterday that there were no plans to raise water price this year, but state-run Taiwan Power Co (Taipower) was mulling whether to raise electricity fees, probably before the peak summer season starts in June. Hwang did not provide any more information on the hikes.
Frequent long-haul bus passengers may feel the impact of the fuel price hikes as several bus operators plan to raise bus fares. But the Directorate-General of Highways (DGH) yesterday rejected a proposal to raise the cap on ticket fares by 18 percent.
DGH Director-General James Chen (陳晉源) said the proposal was rejected, as the operators had failed to factor in other management costs. The DGH would re-evaluate the proposal when the operators submit more detailed evaluations.
Chen added that even though the operators can increase prices within the legal range, the operators have to report to the Ministry of Transportation and Communications first and officially raise the price after they have announced the new policy to the public two weeks in advance.
United Bus Co (統聯客運) and Ho-Hsin Bus (和欣客運) have announced that they will raise prices tomorrow, whereas Aloha Transportation Co (阿羅哈客運) and Kuo-Kuang Motor Transport Co (國光客運) have decided to keep prices the same.
According to CEPD estimates, for every 10 percent hike in electricity costs, the nation's CPI will rise by 0.37 percent.
To keep the CPI below 2 percent, CEPD Chairman Hu Sheng-cheng (胡勝正) announced on Tuesday the lowering of the annual revenue target set for the CPC, and the halving of import tariffs on gasoline from 10 percent to 5 percent.
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