Four days after retail fuel prices reached an all-time high, sending consumer prices soaring, the Cabinet yesterday effectively froze pump prices.
The government decided in September that fuel prices would not be allowed to rise above their levels on Sept. 2 by more than 15 percent. But that cap has now been set at 12 percent.
"As fuel prices have increased by 11.75 percent [since Sept. 2], it's unlikely that they will be raised further," Government Spokesman Shieh Jhy-wey (
Shieh made the announcement following a meeting of a Cabinet task force convened by Vice Premier Chiou I-jen (
However, the task force hasn't decided how long fuel prices will be capped at their present levels.
Chen refused to comment on whether the cap could be revised further, saying only that this depended on "the trend in international crude oil prices."
The state-run CPC Corp, Taiwan (台灣中油) raised wholesale gasoline and diesel prices by NT$0.9 per liter on Thursday, bringing the retail price for 92-octane unleaded gasoline to NT$30, the retail price for 95-octane unleaded gasoline to NT$30.7 per liter, the retail price for 98-octane unleaded gasoline to NT$32.2 per liter and the retail price for premium diesel oil to NT$27.5 per liter.
Had the cap been maintained at 15 percent, the retail price for 92-octane unleaded gasoline could have risen to NT$30.5 per liter, while 95-octane unleaded gasoline could have increased to NT$31.2.
Cabinet officials denied that the change in policy amounted to an about face.
Chen said it was "reasonable" to lower the cap.
"We didn't expect international oil prices to increase at such a rapid rate when the 15 percent ceiling was put in place," he said.
Premier Chang Chun-hsiung (張俊雄), facing calls from the Democratic Progressive Party (DPP) caucus to resign if the government fails to address soaring commodities prices, promised yesterday to stabilize prices "as soon as possible."
"As the premier, I have to give consideration to commodity prices and market competition. I will not shirk this responsibility," Chang said in response to questions from Chinese Nationalist Party (KMT) Legislator Lee Ching-hua (李慶華).
Lee said the consumer price index was 5.34 percent last month, the highest since October 1994.
Chang said he respected the opinions of fellow DPP legislators but did not specify whether he would tender his resignation if prices continued to rise.
Chang also said he would step up investigations into whether any businesses were raising prices unnecessarily. He said anyone found to be hiking prices would be severely punished.
Meanwhile, privately run Formosa Petrochemical Corp (台塑石化) refused to say whether it would follow CPC in freezing fuel prices.
The nation's second-largest oil refiner bases its fuel prices on CPC's pump prices and has been investigated by the Fair Trade Commission for price fixing.
Formosa Petrochemical sells about 70 percent of its fuel to overseas markets.
Formosa Petrochemical's net income for the first three quarters of the year increased by 6.68 percent to NT$51.37 billion, or NT$5.55 per share, from a year ago.
In related developments, President Chen Shui-bian (陳水扁) said the increases in fuel and commodity prices were mostly attributable to the rising prices of raw ingredients sourced from international markets.