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Oil May Surge By NT$3.5

The domestic oil prices should be surged by at least NT$3.5 per liter if the increased crude oil import costs are to be fully reflected said to informed sources, unless international crude oil prices soften

Oil May Surge By NT$3.5

The domestic oil prices should be surged by at least NT$3.5 per liter if the increased crude oil import costs are to be fully reflected said to informed sources, unless international crude oil prices soften.

Due mainly to the government starting to freeze hikes on domestic oil prices on Dec. 1, 2007, state-run oil firm CPC Corp. Taiwan suffered operating losses of close to NT$23 billion in the first quarter of this year alone.

The single-month red ink for April alone is likely to break the NT$10 billion mark as a result of the ever-rising international crude oil prices, which already rallied to a high of US$119 per barrel on April 22.

While the CPC is laboring under the ever-expanding losses caused by the incumbent government's insistence on maintaining the freeze on oil price hikes, the incoming Kuomintang-ruled the new government will immediately face a big headache after it takes office on May 20 concerning the size of the oil price hikes.

Economics Minister-designate Finn Chili-Ming said recently after the new government takes power, it will resume the floating oil price formula that has been frozen since December 2007. "In principle, domestic oil prices will be hiked, at one sitting, in accordance with the formula," Yin said.

Under the existing formula, the size of the oil price hike is set at 80 percent of the increase in the average monthly international crude oil prices, which, in turn, is based on 70 percent of the Dubai oil futures and 30 percent of Brent oil futures.

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