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CPC hikes fuel prices by NT$1

Motorcyclists in Taichung City swarm a gas station in the city yesterday following Chinese Petroleum Corp's announcement that it was raising the wholesale prices of gasoline and diesel oil by NT$1 (US$0.03) per liter. PHOTO: CHAN CHAO-YANG, TAIPEI TIMES

State-run Chinese Petroleum Corp (CPC) announced yesterday that it would raise wholesale gasoline and diesel oil prices by NT$1 (US$0.03) per liter each, with the new rates taking effect at 10pm last night.

In a statement released on the Ministry of Economic Affairs' Web site, CPC said wholesale gasoline prices will rise by 3.8 to 4.1 percent, depending on the grade of fuel, and retail gasoline prices will increase by 3.4 to 3.7 percent.

After the third hike of the year, the retail price for 98-octane unleaded gasoline, for instance, will be NT$30.1, 95-octane unleaded gasoline will be NT$28.6, 92-octane unleaded gasoline will be NT$27.9, and top-grade diesel oil will be NT$24.5 per liter.

As a wholly government-owned refinery, CPC is unable to fully pass costs onto consumers because of the government's inflationary concerns. Accordingly, the company's financial risk profile has deteriorated substantially for the first half of the year.

The company said it estimates the cost of imported crude oil will rise 8.93 percent, to US$61 per barrel, this year from its previous forecast of US$56, after the US Department of Energy last month revised upward the average price of West Texas Intermediate (WTI) crude oil this year, to US$68.11 per barrel, from US$63.27 predicted in January.

WTI crude oil prices have been hovering around US$75 per barrel.

The company originally proposed a hike of NT$2 per liter for its wholesale gasoline and diesel oil products this time, after it suffered net losses of NT$19.6 billion in the first six months of the year. However, the Ministry of Economic Affairs only agreed to a NT$1 increase per liter after it took the implementation of higher electricity rates this month into account.

Wu Chao-ming (吳昭明), a section chief at the government's statistics bureau, estimated that the NT$1 hike on gasoline prices will add 0.035 percentage points to the consumer price index (CPI), which stood at 1.73 percent last month.

The government hoped to keep the CPI under 2 percent, but the target may be hard to achieve, especially given an anticipated rise in vegetable and crop prices during the upcoming typhoon season, which may push the figure up further, Wu said.

CPC also announced subsidiary measures for the transportation sector, to avoid a hike in bus and taxi fares that would further drive up the consumer price index.

The company plans to distribute chip-embedded cards to taxi drivers, which will give them a discount of NT$1 per liter on 550 liters of fuel per month.

As the new rates will only cover part of the company's deficit, CPC is asking consumers to conserve energy usage, as the company may raise prices again in the future.

Also see story:Ministries told to help transport firms deal with gas hike

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