Fri, Nov 02, 2007 - Page 3 News List

Ceiling on oil price could be lowered

WORRIES As the price of oil continues to rise, the government is pondering a series of interventions to mitigate the impact of rising commodity prices on people's lives

By Shih Hsiu-chuan  /  STAFF REPORTER

Vice Premier Chiou I-jen, who doubles as chairman of the Consumer Protection Commission, answers questions about rising oil prices at a press conference in the legislature yesterday.

PHOTO: CNA

The government could lower the ceiling on oil prices if prices cause too much public worry, Consumer Protection Commission Chairman Chiou I-jen (邱義仁) said yesterday.

"The recent rise in oil prices has exceeded 10 percent and will soon reach 15 percent if the trend continues. If we can't address public worries on the matter, we could consider lowering the ceiling," Chiou said in response to a question by Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) at the legislature's Sanitation, Environment and Social Welfare Committee yesterday.

Under the floating oil pricing mechanism implemented in September, the government would freeze the price of oil if it became 15 percent higher than the price registered on Sept. 2.

While Chiou had been asked to attend the committee for a review of the commission's annual budget, lawmakers focused on rising oil prices instead.

Lai asked Chiou, who also doubles as vice premier, to assess the impact of rising oil prices on the nation's economy, and accused the government of not showing enough concern for the recent rise in commodity prices.

Later yesterday and following state-owned CPC Corp's decision to lift gasoline prices, Cabinet Secretary-General Chen Chin-jun (陳景峻) told a press conference that the government was determined to stabilize oil prices.

"Given that the 15 percent ceiling has not been reached and in view of the fact that the floating oil pricing mechanism was formulated after extensive deliberation, we still have to raise the price of oil to reflect prices in the international oil market in line with the pricing mechanism," Chen said.

He said the impact of the rise in oil prices on the economy since September was still acceptable.

A 10 percent increase in the price of oil has resulted in a 0.23 percent increase in the consumer price index and a decline of less than 0.2 percent in economic growth, he said.

"We will review the floating pricing mechanism when the influence of rising oil prices on the economy has become unacceptable," Chen said, without elaborating.

Chen said the government has plans to address rising commodity prices and that it will clamp down on companies that raise prices artificially.

"Despite the rise in international oil prices, the government has absorbed some of those increases," Chen said, adding that the price of electricity and water would remain unchanged to counterbalance the rising cost of essential commodities.

Noting that the local oil price was still lower than that in the region, Chen called on the public to trust the government as it tries to stabilize commodity prices.

"Given that the price of oil will likely continue to rise, we won't be able to freeze the price of oil indefinitely. We need to save energy and develop alternative sources of energy," he said.

At a separate setting yesterday, President Chen Shui-bian (陳水扁) expressed support for the Executive Yuan's adoption of the "floating oil pricing system."

He said the Democratic Progressive Party's Central Standing Committee and the Executive Yuan had reached a consensus on Wednesday to support the system.

The government will review the situation in a week and decide whether to intervene or change the mechanism, he said, adding that "the answer will be satisfactory and lower the impact on people's lives."

The price of propane, natural gas and heating oil would not increase, he said.

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