Taipei, Oct. 7 (CNA) State-owned oil refiner CPC Corp. Taiwan said Sunday it will not increase its gasoline and diesel prices for the rest of the year despite rising international oil prices to help keep domestic price levels stable.
CPC normally adjusts its prices at the pump on a weekly basis depending on price fluctuations in global crude oil markets, and had it done the same this week, domestic fuel prices would have reached their highest level since October 2014, the company said.
CPC had already announced Sunday morning that fuel prices should have gone up NT$1.2 (US$0.039) per liter in the coming week based on its standard formula and that it was going to increase prices by NT$0.5 per liter and absorb NT$0.7 per liter itself to help keep commodity prices in check.
But it reversed course around noon, and decided to cap fuel prices at the current level until the end of this year.
CPC did not explain the sudden change of heart, other than to say it was worried about the impact of higher fuel prices on inflation, but CPC Vice President Huang Jen-hung (???) said the move had nothing to do with politics.
Taiwan is holding elections across the country for local government posts on Nov. 24, and consumer prices could be a sensitive issue.
CPC's decision will keep fuel prices at CPC gas stations for the coming week at NT$30.0 per liter for 92 octane unleaded, NT$31.5 per liter for 95 unleaded, NT$33.5 per liter for 98 unleaded and NT$28.2 per liter for super diesel, according to the company.
Fuel prices were last as high as they would normally be now on Oct. 13, 2014, when the prices were NT$30.9 per liter for 92 octane unleaded and NT$32.4 per liter for 95 unleaded.
The company calculates its weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude, and based on that formula, the average oil price rose US$3.28 to US$83.72 per barrel the past week.
That culminated a seven-week stretch in which crude prices have soared 18.57 percent under the 7D3B formula from US$70.61 per barrel on Aug. 20, putting local fuel prices under pressure.
CPC's Huang estimated it will cost the company an estimated NT$300 million to absorb the full brunt of the fuel price hike for the coming week but said it would be difficult to estimate the cost of keeping the cap in place to the end of the year because of the unpredictable nature of global oil prices.
Huang would only say that CPC hopes oil prices will remain stable in the short term to limit the company's losses.
Investors and analysts are beginning to anticipate the possibility that oil will hit US$100 a barrel during the winter peak demand season between late 2018 and early 2019, according to the company.
Because higher oil prices could hurt global economic growth, however, oil-producing countries and OPEC members see US$70-80 per barrel as an ideal price range and could jack up production to keep prices in that range, CPC said.
Privately run Formosa Petrochemical Corp. (FPC) announced, meanwhile, that it will also not adjust its fuel prices for the coming week.
That means prices at FPC gas stations nationwide will remain at NT$27.9 per liter for super diesel, NT$30 per liter for 92 octane unleaded, NT$31.4 per liter for 95 unleaded and NT$33.5 per liter for 98 unleaded, according to the company.
FPC said it decided to freeze prices for the coming week in line with the government's policy to help stabilize commodity prices but will have to evaluate whether or not it can maintain the price freeze to the end of the year, according to FPC Executive Vice President Lin Keh-yen (???).
Source: Focus Taiwan News Channel