The Economic Affairs Committee of the Legislative Yuan in Taiwan reached a consensus on October 22, 2012 to hold the price of natural gas and liquefied petroleum gas (LPG) from now to the end of 2012.
According to academics, the government should not intervene with the free market. State-owned enterprises such as China Petroleum has less efficiency than private-owned companies, and with government subsidies, the state-owned companies continue to incur net losses. The price set by China Petroleum is not competitive and allows privately-owned firms to enjoy high gross margins.
The Committee's decision to freeze the price of natural gas and LPG is due to the current economic downturn. The decision means China Petroleum cannot change prices in October-December 2012. Legislators further demanded that the price-adjustment mechanism for natural gas and LPG should include economic indices.
The Taiwan government recently announced September's consumer price index at 110.39, up by 2.96% compared to September 2011. The average index from January-September 2012 also showed an on-year increase of 1.96%. The price hike of gas and electricity is likely to be the main reason for this increase, according to legislators.
