With price increases at the gas pumps inevitable if international oil prices continue to soar, the government said on Thursday it plans to split the burden three ways and subsidize the less privileged to help tide them over difficult times.
Fielding questions at the legislature, Minister of Economic Affairs Shih Yen-shiang (施顏祥) said it would not be possible to freeze domestic oil prices for the sake of protecting consumers and preventing inflation.
When the international crude price soars toward US$120 a barrel, the government, China Petroleum Corp, Taiwan (CPC) and the public each share the burden — with the government cutting commodity tax by half to take its share, Shih said.
Not all consumers will be hit equally, because the government is planning to subsidize public transport operators and taxi drivers, as well as buses for the disabled.
Farmers and fishermen whose livelihoods depend on the use of oil products will also get subsidies from the government, Shih said.
“The measures will come into force when the oil price approaches US$120 a barrel,” he told lawmakers.
The price of crude on Thursday was US$104 a barrel.
Anticipating that the price might increase as high as US$150 to US$200 per barrel, Shih said that if that happened, the government would be forced to ration oil products — something that would be done all over the world.
He said reserves of crude are currently at 126 days, much higher than the 90-day “safety level.”
Shih said a price freeze would not be a “responsible” way of coping since CPC incurred losses of NT$20 billion (US$677 million) in 2009 and NT$4 billion last year because of a policy that froze oil prices in 2008, which caused CPC to run a deficit of NT$139.7 billion.
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