Cabinet defends decision to keep gas prices frozen

The continued freeze will cushion impact on public of surging oil costs, Shieh says

The government's decision to maintain a gasoline price freeze is due to the consideration of the interests of the public, Executive Yuan spokesman Shieh Jyh-wey said yesterday.
Shieh made the remarks after Minister of Economic Affairs Steve R.L. Chen said earlier in the day at the Legislative Yuan that he had strongly suggested to the Executive Yuan that the gasoline price freeze, imposed late last year, be lifted.
The Executive Yuan announced March 24 that the state-owned petroleum supplier CPC Corp. Taiwan, will continue its gasoline price freeze at least until May 20, when President-elect Ma Ying-jeou (馬英九) will assume office.
But Formosa Petrochemical Corp. (FPCC), the nation's only private oil refiner, increased its gasoline prices March 29 to reflect the surging cost of international crude oil, causing an increased demand of around 30 percent for CPC fuel over the past two days, a clear indication of its cheaper prices.
"The Executive Yuan understands the considerations of the Ministry of Economic Affairs and CPC Corp., but as a responsible government, it has to consider all sides of the issue," Shieh said.
"The continued freeze will cushion the tremendous impact on the public of the surging world crude oil prices," he continued.
If the government does not continue the freeze, it will be like "adding fuel to the fire and will have terrible consequences, " he said.
The legislative caucus of the ruling Democratic Progressive Party also said it will support a continued freeze, despite opposition Kuomintang legislators' claims that the Cabinet intends to "leave the mess" to the new government.
Tsai Huang-liang (蔡煌瑯), a DPP legislative caucus whip, said the Cabinet's decision is "for the wellbeing of the public."
Tsai said that as a caretaker government, it should refrain from making major changes regarding personnel or major policies. If gasoline prices are adjusted upward, all consumer goods will see price hikes, putting an even heavier burden on the public, he said.
He said that if the CPC trade union or the FPCC "have other views," they should express these views to the KMT legislative caucus.
If the KMT, KMT legislative caucus or Ma think gasoline prices should be raised immediately, the Executive Yuan will consult with Ma's new administration and the legislative caucus will respect the results of the consultation.
CPC Chairman Pan Wenent recently said the company has estimated that it will lose between NT$20 billion and NT$24 billion in the first three months of this year due to the freeze.
The CPC, Taiwan's largest oil refiner, earned an average NT$2 billion per month last year when a floating fuel pricing system to reflect international crude price fluctuations was implemented.
However, due to the government's decision to freeze the system in November 2007 lest it fan inflationary pressure, CPC losses had accumulated to NT$13.2 billion in the first two months this year, with losses estimated to increase to between NT$20 billion and NT$24 billion for the first 3 months of 2008.
CPC Corp. adopted the floating pricing mechanism in January 2007 under which it adjusted its fuel prices on a weekly basis in response to crude oil price surges.
The system was then replaced by a monthly adjustment mechanism last September.