Formosa Petrochemical follows CPC policy to keep fuel prices unchanged for third straight week

Domestic fuel prices have recently entered a rare period of stability. The official website of Formosa Petrochemical Corporation announced that starting from the 5th, the prices of its various gasoline and diesel products will remain unchanged with no upward adjustments. This decision was made against the backdrop of international crude oil prices remaining at relatively high levels, primarily following the fuel price freeze policy previously announced by CPC Corporation, Taiwan. This also marks the third consecutive week since mid-September that the domestic fuel market has maintained a price freeze, refraining from adjustments based on international market fluctuations. For the country's massive driving population, the logistics and transportation sector, and operating costs across various industries, this undoubtedly serves as a short-term reassurance, effectively easing the pressure of persistently rising inflation.

Looking back at the starting point of this price freeze cycle, one must trace it back to mid-September. At that time, international oil prices exhibited a volatile upward trend driven by the intertwining of multiple factors, including geopolitical risks and the extension of production reduction agreements by major oil-producing countries. CPC Corporation and Formosa Petrochemical announced on September 13th that they would raise gasoline prices starting September 14th to reflect the imported cost pressures at the time. However, as international oil prices entered a high-level consolidation phase in the following weeks, the domestic fuel price stabilization mechanism was activated. Since the price hike in mid-September, domestic retail prices for gasoline and diesel have maintained a "triple freeze" for three consecutive weeks, demonstrating that the domestic fuel pricing mechanism is striving to find a balance between taking care of the livelihood of the economy and reflecting market costs.

A deeper analysis of the domestic fuel pricing mechanism reveals that Taiwan has long adopted a dual mechanism featuring limits based on the lowest prices among Asian neighbors and fuel price stabilization. When international crude oil prices surge sharply due to unexpected events, CPC shoulders the policy mandate of stabilizing domestic prices, frequently preventing worsening inflation by absorbing a portion of the price increases. Because Taiwan is highly dependent on energy imports, any fluctuations in international crude oil prices directly impact domestic production costs and consumer prices. Formosa Petrochemical's decision to simultaneously announce no price adjustments while international oil prices remain high stems not only from price competition considerations in a free market, but also reflects a high degree of tacit understanding and social responsibility between the nation's two major fuel suppliers in stabilizing domestic consumer prices amidst the current macroeconomic environment.

As a core indicator of baseline industries, every movement in fuel prices affects the entire system. The three-week consecutive freeze on gasoline and diesel prices temporarily relieves passenger and freight transport operators, taxi drivers, and small and medium-sized enterprises heavily reliant on logistics and distribution—all of whom are currently facing operational pressures—from the anxiety of soaring costs. Broadly speaking, the temporary stabilization of energy prices helps curb further expansion of the Consumer Price Index. For the general public, commuting costs and the transportation expenses of everyday consumer goods receive a temporary reprieve. At a stage where wage growth fails to keep pace with price hikes, this helps maintain the public's real purchasing power and alleviates anxiety regarding rising living costs.

Looking ahead to subsequent fuel price trends, market analysts point out that despite the recent temporary freeze on domestic fuel prices, uncertainties in the international energy market remain very high. With winter approaching, heating oil demand is likely to increase. Coupled with the tension in the Middle East which could at any time affect crude oil production capacity and supply chain security, the probability of international oil prices pulling back significantly in the future is relatively limited, and high-level fluctuations may become the norm. This means that domestic fuel prices still face a certain degree of pressure for catch-up adjustments in the future. The public and the industrial sector should seize this window of stable fuel prices to properly manage energy efficiency and control costs, so as to prepare for potential challenges from recurring energy price volatility.