Mechanism to moderate fuel price increases to take effect (update)

Taipei, A mechanism designed by the Ministry of Economic Affairs (MOEA) to moderate domestic fuel price increases is scheduled to take effect next week, according to the ministry.

The mechanism is aimed at reducing the financial burden on consumers by stabilizing fuel prices at a time when international crude oil prices have been on the rise amid geopolitical tension, in particular after U.S. President Donald Trump announced U.S. withdrawal from a nuclear agreement with Iran.

The withdrawal from the 2015 international treaty is expected to lead Washington to re-impose economic sanctions on Iran, which could cut the global crude supply and in turn boost international crude prices significantly.

95 unleaded gasoline will be used a benchmark for the new fuel price calculation mechanism, the MOEA said.

Under the mechanism, if the price of 95 unleaded stays below NT$30 (US$1.01) per liter according to state-owned oil supplier CPC Corp., Taiwan's existing weekly weighted oil price formula, domestic fuel prices will fluctuate normally.

CPC calculates its weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude.

If the price of 95 unleaded rises to between NT$30 and NT$32.4 per liter, CPC will shoulder 25 percent of the weekly price increase and consumers will share the remaining 75 percent of the increase.

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.

Citing the new mechanism, which will be implemented next week, Formosa Petrochemical Corp., a private fuel supplier that usually announces its fuel price adjustments for the coming week on Saturdays, has decided to postpone its weekly announcement to Sunday afternoon, allowing CPC to be the first to announce its own fuel price adjustments for next week.

CPC normally announces its fuel price adjustments at noon Sunday, to take effect 12 hours later.

The fuel prices at Formosa Petrochemical gas stations islandwide are currently at NT$25.8 per liter for super diesel, NT$28.1 per liter for 92 octane unleaded, NT$29.5 per liter for 95 unleaded, and NT$31.6 per liter for 98 unleaded.

Source: Focus Taiwan News Channel