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Taiwan Caps Fuel Price Hikes Amid Middle East Conflict Oil Surge

Taiwan has activated a dual price-smoothing mechanism to sharply limit increases in gasoline and diesel prices despite surging global oil costs linked to the Middle East conflict. The state-run energy company will absorb most of the increase, while the government has implemented tax cuts and subsidies for agriculture and fishing. Officials express confidence that liquefied natural gas supplies will not be disrupted, having secured most necessary carriers. This policy mirrors measures taken after the Ukraine war, which previously led to significant losses for the state energy firm.

Key Points: Taiwan Limits Fuel Price Increases as Global Oil Prices Soar

  • Dual price-smoothing mechanism limits fuel hikes
  • State-run CPC Corp. to absorb 60% of price increases
  • 50% commodity tax cut on fuel imports
  • LNG supply secured despite regional conflict
2 min read

Taiwan: Price stabilization measures launched as oil prices surge

Taiwan activates price-smoothing measures to limit gasoline and diesel hikes, subsidizes key sectors, and secures LNG supply amid Middle East conflict.

"confident such a scenario would not occur - Kung Ming-hsin"

Taipei, March 11

Taiwan will not sharply increase its gasoline and natural gas prices despite surging global oil prices triggered by the ongoing Middle East conflict that began with American and Israeli attacks on Iran, Focus Taiwan reported, citing officials.

As per the news report, Premier Cho Jung-tai said the Cabinet has activated a "dual price-smoothing" mechanism since Monday to limit increases in the prices of gasoline and diesel fuel.

Under the normal fuel calculation formulas, gasoline and diesel would have gone up NT$5.4 (USD 0.17) per liter and NT$4.8 per liter, respectively, on Monday, but under the mechanism, the increases were limited to NT$1.5 and NT$1.1 per liter.

Vice Premier Cheng Li-chiun said Monday during a Cabinet price stabilization meeting that state-run CPC Corp., Taiwan, would absorb 60 percent of the price increases.

Taiwan adopted a similar policy in the aftermath of Russia's invasion of Ukraine, which sent oil prices soaring, but led to CPC Corp. losses of NT$193.7 billion in 2022, NT$22.4 billion in 2023 and NT$35.45 billion in 2024.

As per the report, Cho said the Cabinet has also implemented a 50 percent commodity tax cut -- the provisional maximum -- on diesel and gasoline imports and will subsidize 50 percent and 14 percent of fuel costs for the agricultural and fishing sectors, respectively.

During a legislative session Tuesday, opposition Kuomintang (KMT) lawmaker Wang Hung-wei asked Economics Minister Kung Ming-hsin whether the war in the Middle East will disrupt Taiwan's natural gas supplies, which rely almost entirely on imports.

Kung replied that he was "confident" such a scenario would not occur.

Kung said Monday that the ministry has secured 20 of the 22 liquefied natural gas (LNG) carriers it estimates Taiwan will need to transport LNG through April in response to the Middle East situation, adding that it expects to secure the remaining two soon.

The minister also said that CPC Corp. currently has no plans to raise LNG prices, despite reports that Formosa Petrochemical Corp., another major LNG importer in Taiwan, has increased prices by NT$20 per barrel in parts of southern Taiwan.

But he did not disclose whether that would continue, as natural gas prices surge due to the Middle East conflict.

According to the Japan/Korea Marker (JKM), which covers natural gas prices to East Asia, including Taiwan, prices on Monday reached US$55.38 per MWh (megawatt-hour), up 51.3 percent from the US$36.60 per MWH seen on Feb. 27 just before the war started.

- ANI

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Reader Comments

S
Sarah B
Interesting read. The state-run company absorbing 60% of the increase is a huge burden, as shown by their past losses. It's not sustainable in the long run. Governments worldwide, including in India, need to focus on energy independence and diversifying sources rather than just subsidizing. Renewables are the future.
A
Ananya R
The minister says he's "confident" supplies won't be disrupted, but relying almost entirely on imports is a major strategic vulnerability. 🇮🇳 India is also a large importer. This conflict shows why we must fast-track our own exploration and build stronger ties with stable energy partners. Jai Hind!
V
Vikram M
A 51% price jump in natural gas is massive! This will have a ripple effect on everything from electricity to manufacturing costs. While the short-term measures are necessary, it feels like putting a band-aid on a bullet wound. The root cause is geopolitical instability far from their shores.
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Karthik V
Respectfully, while the intent to protect citizens is good, the article mentions the state company lost billions in previous years doing this. That's taxpayer money eventually. Sometimes, a gradual pass-through of prices with targeted support for the vulnerable is better than blanket controls that create bigger fiscal holes.
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Priya S
The focus on securing LNG carriers shows how logistics become critical during a crisis. It's a reminder for all import-dependent nations. Hope the situation de-escalates soon for global stability. 🙏 Everyday life gets so expensive because of wars happening elsewhere.

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