Formosa Petrochemical Corp (
Formosa Petrochemical lowered wholesale prices of gasoline by NT$0.5 per liter and diesel oil by NT$0.3 per liter, the company said in a release, adding that it had to do so to compete with CPC.
As the two companies may have taken part in price collusion, the Fair Trade Commission will look into the case, commission chairwoman Chou Ya-shu (周雅淑) said in a telephone interview.
The commission fined CPC and Formosa Petrochemical NT$6.5 million (US$197,478) each in October 2004 for collusive behavior in fixing gasoline prices on 21 occasions.
Ruling difficult
As the commission found it difficult to determine whether the two companies had agreed on the price adjustment beforehand -- one major element that constitutes price collusion -- it cannot rule on a single instance, Chou said.
CPC was reportedly ordered to lower prices on the instructions of the Cabinet, following criticism from the Consumers' Foundation (消基會) on Tuesday.
"The range of the price cuts are still lower than the previous price hikes," the foundation's chairman Jason Lee (李鳳翱) said yesterday. "As prices of crude oil are still sliding, CPC and Formosa Petrochemical should continue to drop their prices voluntarily, and not just when they come under public pressure."
15 percent drop
As crude oil prices have dropped more than 15 percent from their peak, the two refiners should at least cut the price by NT$1 per liter, Lee said.
West Texas Intermediate for delivery in October climbed US$0.56 to US$63.32 a barrel on Wednesday.
CPC, which had previously refused to cut prices, said the price drop this time would cost the company NT$1.5 billion, increasing its yearly losses to NT$27.5 billion.
Yang Chia-yen (楊家彥), a researcher at the Taiwan Institute of Economic Research (台經院), said that gasoline prices in Taiwan were lower than in other developed countries, which was not good.
The comparatively low prices will result in low energy utilization rates and waste of energy, Yang said, adding that the situation would make it harder for Taiwan to comply with ever-tightening international environmental protection regulations.
"The government should let market mechanisms decide gasoline prices, which will help save more energy," Yang said.
In Taiwan, gasoline pricing policy is a political tool to ease public dissatisfaction and win votes, Yang said.
Demanding that CPC absorb losses was unfair to people who do not use vehicles, as the deficit of CPC, as a state-owned firm, will eventually be covered by all taxpayers, he added.
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