Barreled gas (also known as liquefied petroleum gas) is an important and indispensable energy source for people's daily lives. (File photo)
[Financial Channel/Comprehensive Report] Wu Zaiyi, President of the Taiwan Institute of Comprehensive Economic Research, pointed out that barreled gas (also known as liquefied petroleum gas) is an indispensable and important energy source for people's daily lives. It can be seen everywhere from cooking and bathing at home to catering, snacks, night market activities, etc., and it has the characteristics of convenient storage and transportation and unrestricted distribution. It is a necessary energy source to maintain basic life in rural areas, mountainous areas, eastern counties and outlying islands where pipeline natural gas is not widely available. Therefore, the fluctuation of barreled gas prices not only affects household expenses, but also directly affects many aspects such as catering costs and people's living prices, which is another driving force affecting price inflation.
Wu Zaiyi’s analysis pointed out that my country’s oil and gas is highly dependent on imports. Therefore, when international energy prices rise abnormally due to geopolitical conflicts, if the domestic market immediately reflects the costs, it will not only increase the burden of people’s lives, but will also be transmitted through the price of external food, expanding the pressure on overall price increases. For families with relatively limited income and people in rural areas, mountainous areas and outlying islands, the impact of a sharp increase in the price of barreled gas, which is necessary for people's livelihood, is often more severe and should not be underestimated.
This year's conflict in the Middle East has posed a severe test to the global energy market. In order to fill the supply gap in the Middle East, Asian countries have increased purchases from the United States and other places, which has further boosted long-distance shipping demand and transportation costs, causing international oil and gas prices, shipping and insurance costs to rise sharply simultaneously. The international gas price in November 2015 was US$750 per barrel, an increase of 60% compared to US$467.5 in the same period in 2014. If the increase in shipping costs and procurement costs are added, the price soared to more than 90%. In other words, if all the increases are fully reflected in the price of domestic barreled gas, it will definitely more than double compared to last year.
In view of the impact of the violent fluctuations in international energy prices caused by the conflict in the Middle East, many countries have intervened with relevant policies to avoid direct impacts on people's basic lives and maintain social and economic stability. For example, Japan has used local government subsidies to reduce people's energy expenditures; South Korea has used an energy voucher system to strengthen care for disadvantaged families; my country, India, and Thailand have all adopted measures to freeze and increase gas prices. By freezing prices, the supplier first bears the price difference that should be adjusted but is not. However, if businesses are required to absorb losses on their own for a long time, it will not only increase the business burden on businesses, affect their financial stability and their subsequent ability to provide stable supply, but will also gradually reduce the willingness of private businesses to continue to supply market demand.
Wu Zaiyi believes that the domestic barreled gas market is supplied by China National Petroleum Corporation and Formosa Petrochemical Company. While the government requires the industry to cooperate in stabilizing prices, it should reasonably share the burden of its coordination policies in order to balance short-term price stability and long-term energy supply security. Therefore, measures such as the Ministry of Finance's 50% reduction in gas excise tax have moderately reduced the burden on industry players; the Ministry of Economic Affairs has compiled an additional budget of 8.4 billion yuan to help share the additional costs borne by China National Petroleum Corporation and Formosa Petrochemical Company in stabilizing gas prices, etc. It is indeed reasonable.
The burden caused by the government's additional budget subsidy coordination policy is not essentially to subsidize the profits of enterprises, but to reasonably share the costs with the public finance, so as to avoid the short-term price stabilization policy, which will adversely affect the supply willingness of private businesses and induce long-term supply risks, and maintain the normal operation of the domestic market; from the public From a policy perspective, the beneficiaries of stable barreled gas prices are the vast number of household users and livelihood-related industries. Financial resources should be used to moderately bear the impact of violent fluctuations in international energy prices. In essence, part of the costs that may have been passed on to the people can be moderated in a timely and appropriate manner through public policies.
When the government takes care of people's livelihood, it not only ensures a safe supply of barreled gas. In the face of the impact of the conflict in the Middle East, the government uses strong financial tools in a timely manner, which not only stabilizes domestic gas prices for people's livelihood, but also is a concrete demonstration of protecting the basic life of the people.
