Chinese Nationalist Party (KMT) legislative caucus whip Hsu Yao-chang (徐耀昌) yesterday apologized “on behalf of the KMT” for its “misguided” policy on a fuel price increase just ahead of major declines in international crude oil prices.
The government allowed refiners to raise the prices of gasoline and diesel products by an average of 10.7 percent on April 2, the steepest increase in four years, after the policy was approved by President Ma Ying-jeou (馬英九).
Since the policy took effect on April 2, the state-run oil refiner CPC Corp, Taiwan (CPC, 台灣中油), which makes weekly adjustments to domestic gasoline and diesel prices based on the Dubai and Brent crude oil price indices, has lowered its prices for nine consecutive weeks.
Hsu blamed CPC, accusing the company of being “unprofessional,” and saying that the way it “misjudged the situation” and “kept President Ma in the dark” had “left the government with egg on its face.”
“Therefore, I have to apologize to the people on behalf of the KMT,” he said in response to Democratic Progressive Party (DPP) caucus allegations that the gasoline policy was the main culprit in a wave of price increases affecting consumer goods and services.
The government said the price hike policy was a way to rationalize the fuel price mechanism. Since December 2010, the government said, CPC has been subsidizing the nation’s oil products to stabilize consumer costs by covering half of any necessary price increases.
According to the government, with that subsidy in place, domestic gasoline and diesel prices rose 8 percent and 11 percent respectively from December 2010 to March this year, while international crude prices surged 43 percent during the same period.
The government said that because of the subsidy, CPC suffered an after-tax loss of NT$36.1 billion (US$1.2 billion) last year and an after-tax loss of NT$1.25 billion in the first two months of this year.
Accusing the government of failing to stabilize commodity and retail prices, while demanding that fuel prices be lowered to their pre-April levels and electricity prices be frozen, DPP Legislator Pan Men-an (潘孟安) told a press conference yesterday that Vice Premier Jiang Yi-hua’s (江宜樺) admission that market prices were a lot higher than government data showed was proof that the Ma administration’s economic policies had failed.
According to statistics compiled by the Directorate-General of Budget, Accounting and Statistics (DGBAS), the consumer price index (CPI) last month increased by 1.74 percent compared with the same period last year, Pan said. However, a household of four would have to spend NT$5,000 more per month because of increases in retail prices caused by the government’s decision to raise fuel prices and, Pan said, citing the DPP’s estimate. The data showed that an Executive Yuan panel charged with monitoring and stabilizing retail prices, which was headed by Jiang, had failed its mission, he said.
With international pricing down 20 percent, fuel prices in Taiwan were scaled down for nine consecutive weeks under the floating fuel price mechanism, further evidence that the price increase policy was wrong, DPP Legislator Chen Ting-fei (陳亭妃) said.
“Nevertheless, retail prices stayed at the same level,” she said, adding that there could be another price hike when the cost of electricity increases on Sunday.