Tuesday, April 03, 2012

Fuel Price Hike Firestorm

What is the meaning of this gigantic rhinoceros statue on the grounds of the new Taichung City Hall?

The Administration hiked fuel prices this week 10.7% after it ended a cap on fuel prices that had lasted more than a year -- not coincidentally, during the run-up to the election. Minister of Economic Affairs Shih said that oil prices had been lower than market prices for many years....
The Democratic Progressive Party (DPP) said while it does not oppose reasonable fuel-price increases, the decision should have been made after CPC reviewed its high personnel costs and disclosed its oil purchasing contracts, which have never been made public.

“If CPC fails to act on these suggestions, the DPP will not rule out boycotting the company’s budget,” DPP Legislator Pan Men-an (潘孟安) told a press conference.

“The company has refused to review its floating fuel price mechanism and it is using taxpayers like an ATM, squeezing money out of them whenever it is in the red,” Pan said.

The fuel price increases, as well as hikes to electricity and water costs which are reportedly being considered by the ministry, could push up inflation, Pan added.

“How many companies can distribute year-end bonuses that are equivalent to 4.6 months of pay to every employee, regardless of whether the company makes a profit or not?” DPP Legislator Tsai Chih-chang (蔡其昌) asked.
Taiwanese have subsidized their lifestyles with low prices for water, gas, and electricity for many years. Sooner or later these prices will have to go up. The water delivery infrastructure is in need of a major overhaul but low water prices -- insanely low by global standards -- leave it with little money for investment. The government's failure to implement aggressive policies to penalize big automobile engines -- instead small engine cars subsidize bigger ones through the regressive fuel tax -- contributes to the problem. The KMT English news organ reported Minister Shih as saying:
Facing mounting criticism of the government’s decision to raise fuel prices, Shih said yesterday, “Since the government put a cap on fuel prices, international crude oil prices have gone up by 43%, but domestic fuel prices have only gone up by approximately 10%. Consequently, the government had no choice but to raise fuel prices.
Raising gasoline prices is eminently reasonable; it will force sensible transportation decisions by the public. I would argue they should be even higher, and the revenues used to begin implementation of electric vehicle  sales, research, and infrastructure.

With predictions of economic growth falling since the beginning of the year, this won't help. The stock market slid, and the government said that it would increase "consumer prices by 0.37 percentage points and cut economic growth by 0.22 percentage points."
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Daily Links:
  • Richard Clarke: All US electronics from China may be infected. In other news, sun rises in east, sets in west. What did these people think would happen if they sourced parts from China? Here's a link to the article on how the US lost the naval war of 2015.
  • Excellent video of mountain bike riding in Taiwan
  • US, Canada, Brazil want ractopamine ban here ended.
  • Google building 3rd Asian Data center in Taiwan
  • Bombing Okayama Airdrome: B-29s strike Taiwan
  • My wife found this on Apple: Wen Zao Ursuline College in Kaohsiung once again leads the nation into the 1950s with a ban on tank tops and shorts for females. The students in the video point out that foreign students wear that stuff all the time, but the posters are all in Chinese. One of the staff responded that this is to help the foreigners in their Chinese studies and that it would teach the students what appropriate wear is in the world outside. My wife, who attended that place as a student forty years ago, was disgusted to learn that no progress has been made. She told me that on her first day there, which she transferred to after going to American schools in Vietnam where she was living during the war, she wore the prevailing shorts and tops common in those schools. She was reamed out by some kind of dragon/hall monitor on the stairs, ran back to her room, and burst into tears. Fortunately most schools in Taiwan are not so unreasonable....
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4 comments:

MKL said...

My ex boss (60yrs old) told us once, that if "Chinese people (he meant those in Taiwan) drive small car, they lose face." :)

Michael Turton said...

Oh yes. I've been lectured on driving a van to school....

richard said...

i also think prices should be way higher, although do not think it would change much, maybe if they are r e a l l y a lot higher
bad habits die hard

i heard of studies done in germany when gasoline prices went up few years ago, that gasoline consumption did not go proportionally down

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J said...

Revenues could also be invested in public transportation, which far better suited to Taiwan's geography and density than cars (electric or otherwise), consumes less energy than cars, and is very poor outside of Taipei and Kaohsiung- and even in Kaohsiung it's merely mediocre.