Fuel costs decrease for the second consecutive week.
Fuel Prices Down Despite Oil Price Uptick, Thanks to Taiwan Dollar Strength
By Chen Cheng-hui / Staff reporter
Contrary to the anticipated rise, gasoline and diesel prices at Taiwanese fuel stations are dropping this week by NT$1.1 and NT$1.2 per liter respectively for the second week in a row. CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced these price cuts, despite a rise in international crude oil prices.
The fluctuating international crude oil market saw prices bounce up last week, yet averaged higher than the week prior due to a blend of positive and negative factors, as the companies explained. While optimism around US-China trade negotiations brightened market sentiment, uncertainties lingered regarding OPEC+ members' decision to accelerate oil output next month.
In the international market, Brent crude oil futures, the benchmark, surged by 4.27 percent last week, settling at $63.91 per barrel. West Texas Intermediate crude oil futures, the US benchmark, followed suit, increasing 4.68 percent, to $61.02 per barrel.
The new gasoline prices at CPC and Formosa stations stand at NT$26.1, NT$27.6, and NT$29.6 per liter for 92, 95, and 98-octane unleaded gasoline respectively. Premium diesel will cost NT$24.5 per liter at CPC stations and NT$24.3 at Formosa pumps.
Why are fuel prices declining despite rising crude oil prices? The primary factor is the strengthening of the Taiwan dollar. A stronger local currency reduces the cost of importing crude oil and refined fuel products, helping companies like CPC Corp lower expenses. This hasn't gone unnoticed, contributing to the price cuts in gasoline and diesel[5].
Furthermore, the domestic fuel pricing mechanism lags behind the crude oil market, considering average international crude oil prices over a past period, rather than immediate spot prices. Such a delay in adjusting domestic fuel prices means that temporary fluctuations or previous drops in crude oil prices might have a longer-lasting influence on retail fuel prices[2][3].
In conclusion, the reasons for Taiwan's persistently declining gasoline and diesel prices evidently lie in the favorable impact of the strengthening Taiwan dollar, the lingering influence of past declines in crude oil prices, and the current market volatility. The net effect of these factors outweighs the recent uptick in crude oil prices, enabling Taiwanese fuel companies to lower domestic fuel prices despite the global crude oil trend[1][3][5].
Despite the recent uptick in international crude oil prices, the Taiwanese industry of fuel, specifically CPC Corp and Formosa Petrochemical Corp, has announced price cuts for gasoline and diesel. This is primarily due to the strengthening of the Taiwan dollar, which has reduced the cost of importing crude oil and refined fuel products, leading to a decrease in expenses in the finance sector.
