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August 18, 2017

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Gasoline prices are not likely to drop: report

The China Post news staff--Gasoline prices may not drop next week, as the state-run CPC Taiwan looks to make final moves to normalize the pricing scheme, a report said yesterday.

The state-run firm made its first move on April 2 to normalize gasoline prices by raising prices sharply to reflect actual costs.

Previously, CPC Taiwan, under the government's instruction aimed at curbing commodity prices, had deviated from its pricing formula when raising gasoline prices by less than what they should have.

As a result, local gasoline prices failed to catch up with rising costs, and the state-run firm suffered huge losses.

The April move was the government's first attempt to make up for the difference between gasoline prices and costs by letting CPC recover the sums it should have obtained if prices had increased fully.

At the time, the government was anticipating further rises in international crude oil prices, but since April, prices have been falling instead.

As a result, local gasoline prices, which are adjusted weekly, have fallen 10 weeks straight since April 2.

But the falls have only been half as much as they should have been, because of CPC's move to realign the actual prices to their regular pricing formula.

After more than two months of adjustments, CPC needs to "recover" only another NT$0.30 per liter in gasoline prices to complete the realignment, according to the Central News Agency (CNA).

In order to complete the move, gasoline prices are not likely to drop further next week, CNA said.

After the full recovery of the lost sums, CPC will start adhering fully to the regular pricing formula; declines will be reflected in the actual prices, CNA added.

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