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Shipping may be part of fuel formula: Chen

TAIPEI--It might be worth reviewing whether the formula used in Taiwan to calculate fuel prices should reflect freight costs, Premier Sean Chen said yesterday in response to claims that big freight savings had not been passed on to consumers.

The Chinese-language daily Liberty Times reported Thursday that state-run CPC Corp., Taiwan was “hiding” plunging international ocean freight costs to keep them from being reflected in lower prices at the pump.

According to the report, international freight prices for oil have plunged nearly 75 percent over the past four years from US$20 per metric ton in 2008 to US$5 per metric ton today, giving CPC Corp. NT$9 billion (US$300 million) in savings on freight this year alone, and fuel prices per liter should be reduced by NT$0.7.

CPC Corp. said in the report that those figures were on the high side because they did not account for fluctuations in ocean freight costs, but it acknowledged savings per liter of about US$0.01, or NT$0.3.

Fuel prices in Taiwan are adjusted weekly based on a weighted formula of 70 percent Dubai crude prices and 30 percent Brent crude prices, but it does not include freight costs.

The premier supported the formula, saying it was better to have one than be without one, but he noted that technical issues, such as whether freight could be included in the formula, were open to review.

Chen insisted, however, that people should not see the formula for domestic gasoline prices as favoring the oil companies, because private companies have opted to export their gasoline rather than sell it at home for the designated price.

Meanwhile, with international crude oil prices sliding this week, CPC Corp. plans to reduce diesel and unleaded fuel prices by NT$0.30 to NT$0.20 per liter, but the actual adjustments will not be announced until Sunday.

The company's latest figures released Thursday showed the weighted benchmark crude oil price this week was US$111.09 per barrel, down from US$113.10 per barrel last week.

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