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which the oil product price was linked to the crude oil price on the global market.

Conditional deregulation is directed by this program, under which 40% of the increased portion of oil price is to be borne by the government and the CPC (a government owned company). By cutting 20% of consumption tax imposed on oil product, the government satisfied its burden. The CPC also satisfied its burden of the remaining 20% by equivalent cost cutting. Thus after 2008, oil prices started to fall.

The CPC slided into a significant deficit with the government-regulated pricing regime, and hence negative impacts such as worsened financial standing of the Taiwanese government took place.

Taiwan consists of only 1 private oil company and a government owned company. Hence, price is easily regulated through the government CPC. As there is no intermediary between refiners and customers in Taiwan, only 2 price benchmarks are in use; that is, retail price applicable between service stations and end users and wholesale price applicable between refiners and wholesalers.

Thus, wholesale price volatility directly reflects the retail price.

(Maekawa, 2010; Kawamura, 2010)

India

Form “government-regulated pricing regime” to “gradual lifting of such regime”, and then to “lifting of government control/de factor government control” is how the oil pricing mechanism in India shifted in a step by step manner. The Indian domestic price of oil products had been regulated under the system called “Administered Pricing Mechanism (APM), for the period between 1976 to March 2002. The import if most of oil products was deregulated after April 2002. The import of most of oil products was deregulated after April 2002 and , the increase in demand necessitated the expansion of the supply system after such period.

Household LPG and kerosene continued to be subject to the regulated price, although the government regulated pricing regime under the APM system was lifted against the back drop. Associated with the abolition of APM, the Indian government lifted regulation on the oil price together with gasoline and diesel price. To reflect the climate of oil price and product price, the petroleum planning analysis cell which is a government advisory board, has however advised the state owned Oil Company having 85% market share to adjust the price. The price has been taken determined by the government in consultation with the municipal governments and other parties.

The regulated price was pushed down to a level insufficient to cover the crude oil cost, refining costs and other costs, by the hike in global price. State owned oil companies, the upstream business sector, and the government (by insuance of oil onds) suffered from losses. An unsustainable level was reached in 2008, by the deficit in state owned oil distributors. From 2010, the principal aim of Indian government is to deregulate the price by dismantling the government regulated pricing regime for gasoline and diesel and, it is reportedly considering shortening the adjustment periods of oil product price [report of government India].

As deregulation can eliminate the need to subsidize oil reefing sectors for maintaining the regulated price, the deregulation of oil pricing is expected to curtail the deficit in government financial standing.

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