Oil price freeze sparks row over motivation

By Shih Hsiu-chuan  /  Staff Reporter

Tue, Jan 10, 2012 - Page 1

A war of words was sparked over potential political motivations after state-run oil refiner CPC Corp, Taiwan (CPC, 台灣中油) on Sunday announced it would keep prices for its gasoline and diesel products unchanged for the next three weeks.

Amid mounting concerns that tensions between Iran and the US could disrupt Middle East crude exports and force up oil prices on the international market, CPC said it would not alter its prices before Jan. 29.

Democratic Progressive Party (DPP) Legislator Tsai Huang-liang (蔡煌瑯) told a press conference that the decision was made in a bid to increase support for President Ma Ying-jeou (馬英九), who is seeking re-election in Saturday’s poll.

Tsai said the Chinese Nationalist Party (KMT) was using the domestic oil price as a tool to manipulate voters.

KMT Legislator Hung Hsiu-chu (洪秀柱) defended the policy, saying the decision was made out of concern for people’s expenditures and that the DPP was guilty of having double standards.

“When they [the previous DPP administration] froze local oil prices, they said it was out of consideration for the public. Now when we [the KMT government] do the same thing, they say it was because of electoral concerns. Isn’t that a double standard?” she asked.

CPC said the policy to freeze oil prices was part of the government’s effort to keep consumer prices steady during the Lunar New Year holiday and that the freeze was in accordance with past practice.

However, critics pointed out that in the past, the measure was put in place just before the holiday period. For example, last year CPC imposed a price freeze on Jan. 31, two days before the six-day Lunar New Year holiday, with the freeze lasting for two weeks.

This year, CPC put the freeze in place two weeks ahead of the Lunar New Year holiday, which begins on Jan. 23.

With the freeze enacted, CPC’s wholesale price of 92-octane unleaded gasoline would remain at NT$30.6 a liter, 95-octane unleaded gasoline at NT$31.3 a liter, 98-octane unleaded at NT$32.8 a liter and diesel at NT$29.8 a liter.

The decision not to raise prices also came on the back of a 3.46 percent spike in global crude oil prices last week to US$109.85 a barrel, up from US$106.18 the previous week, which should have prompted a price increase of NT$0.7 a liter for CPC’s gasoline and diesel products based on the CPC’s pricing mechanism, the company said.

Formosa Petrochemical Corp (台塑石化), the nation’s only privately run oil refiner, announced later on Sunday that it would follow suit with CPC’s decision.

Approached by reporters for comment, Acting Premier Sean Chen denied that CPC’s decision was related to the presidential and legislative elections.

“The decision was made by CPC in consultation with the Ministry of Economic Affairs. They did not send the proposal to the Executive Yuan for approval,” Chen said.

Every government agency had been told a month ago to keep commodity prices stable in the run up to the Lunar New Year, Chen said.

“The decision was unrelated to the election. It was just the election happened to be held near the holiday,” he said.