Taipei, State-owned oil refiner CPC Corp., Taiwan announced Sunday that its gasoline and diesel prices will increase this week by NT$0.6 (US$0.02) per liter, which will raise the price of 95 octane unleaded gasoline to the highest level since November 2014.
Effective from midnight Sunday, prices at CPC gas stations nationwide will be NT$28.7 per liter for 92 octane unleaded, NT$30.2 per liter for 95 unleaded, NT$32.2 per liter for 98 unleaded, and NT$26.7 per liter for super diesel, the company said.
The new price of 95 unleaded will match a high of NT$30.2 per liter not seen since Nov. 17, 2014.
CPC explained that international oil prices have been rising due to several factors, including the likelihood that the United States will re-impose economic sanctions on Iran after the U.S. withdrew from a nuclear agreement with Iran; geopolitical intervention in the Middle East; and a drop in the U.S.'s crude oil inventory last week.
CPC normally calculates its weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude.
Under its floating pricing mechanism, the price of gasoline should be raised by NT$0.7 per liter and that for diesel should be adjusted NT$0.8 per liter higher this week after the average price per barrel rose by US$2.97 over the past week from US$71.49 to US$74.46.
If so, the price of 95 unleaded would go as high as NT$30.3 per liter. Now, however, thanks to the government's fuel price stabilization mechanism -- which was not introduced to the market until Friday -- CPC will absorb 25 percent of the weekly price surge to settle the hike at NT$0.6.
The new system was implemented by the Ministry of Economic Affairs to reduce the financial burden on consumers by stabilizing fuel prices at a time when international crude oil prices have been on the rise amid the geopolitical tension. It uses 95 unleaded gasoline as the benchmark for its price calculations.
Under the system, if the price of 95 unleaded stays below NT$30 (US$1.01) per liter according to CPC's existing weekly weighted oil price formula, domestic fuel prices will fluctuate normally.
If the price of 95 unleaded grows to between NT$32.5 and NT$34.9 per liter, CPC will shoulder 50 percent of the weekly increase and the public will bear the remaining 50 percent, while if the price rises to NT$35 or higher per liter, CPC and the government will jointly absorb 75 percent of the increase, with the public sharing the remaining 25 percent.
Source: Focus Taiwan News Channel