Low Gasoline and Electricity Prices Exact High Social Cost

Low Gasoline and Electricity Prices Exact High Social Cost
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
April 6, 2012

Summary: We support the Ministry of Economic Affairs gasoline and electricity price rationalization policy. We believe that CNPC and Taipower should end its disguised gasoline and electricity subsidies. Gasoline prices must reflect market signals. Market signals must direct the allocation of resources. New York Mayor Rudy Giuliani has a famous saying: Between doing the right thing and doing things to please people. one must always choose the former. Only by doing the right thing, can one please people.

Full Text below:

The Ministry of Economic Affairs has raised the price of gasoline and diesel fuel. The price of unleaded 95 octane gasoline has been increased 3.1 NT per liter. The price of diesel fuel has been increased 3.2 NT per liter. The price of fuel oil has been increased 2440 NT per kiloliter. Reporters have interviewed taxi drivers and other vehicle owners as they filled their tanks. Most respondents were predictably angry about the price hikes. Legislators recently questioned Executive Yuan officials about the price hikes. They reflected public concern over the price hikes. They want China Petroleum, the Taiwan Power Company, and other state-owned enterprises to continue absorbing the losses. Ministry of Economic Affairs officials mentioned price hikes only as the questioning in the Legislative Yuan wound down. Presumably they hoped to diminish the psychological impact on the public.

But is government policy really at the mercy of such superficial concerns for public whim? If so, then the policies that result will surely lack any compelling justification. The Taiwan region is seriously deficient in natural resources. We simply cannot maintain the lowest gasoline prices in the world. We lack the wherewithal to maintain such low gasoline prices. Yet we deliberately insist on trying. This means exacting a high social cost. The Executive Yuan must make clear what the social cost would be. Otherwise the government will be trapped on the horns of a dilemma, wondering whether to favor price hikes or oppose price hikes. If it cannot elevate its decision-making to a higher level, it cannot elevate its decisions to a higher level. We have done some of the Ministry of Economic Affairs' homework below. We have laid out, one by one, the social cost of low gasoline prices.

One. Low gasoline and electricity prices mean that China Petroleum and Taipower are operating at a loss. These losses must be made up by subsidies from the state treasury. Subsidies from the state treasury must be made up by taxes. Taxes are extracted from the general public. Therefore low gasoline and electricity prices mean that those who use less gasoline and electricity subsidize those who use more gasoline and electricity. This violates the principle of "users pay." It also violates the principle of just allocation of resources. The first and most serious social cost low gasoline prices exact is to justice.

Two. Low gasoline and electricity prices undermine President Ma's energy conservation and carbon reduction policies. We may not be qualified to tackle certain esoteric economic principles. But the relationship between price and availability is well-established. When President Ma was inaugurated in 2008, his cabinet proposed energy conservation through higher electricity prices, Large companies implemented energy saving programs. In short order the administration saved the generating capacity of a entire electrical generation plant. Electricity and gasoline consumption is clearly inversely related to gasoline and electricity prices. Opposition DPP legislators are pressuring the Executive Yuan to maintain low prices. If the administration caves in, it will be difficult to cut carbon on Taiwan. It will be difficult for industries to reduce their carbon footprint. It will be difficult to achieve President Ma's carbon dioxide emission reduction targets.

Three. Low gasoline and electricity prices exact a social cost most people never notice, but the green energy industry is acutely aware of. The ICT smart grid, LED power-saving light bulbs, solar panel manufacturing, and smart household meters are well-established on Taiwan. But the base must be expanded. We must gain a production advantage in the manufacture of key components, or an operating advantage in system operator services. But how many vendors are willing to invest in R&D for the aforementioned critical components or systems? That depends on the price of green energy compared to traditional fossil fuel energy. When traditional petrochemical and electricity prices are high, green energy R&D becomes more attractive. Taiwan manufacturers are more willing to invest. They gain global industrial advantages in these areas. In short, lower prices for traditional energy is not conducive to the development of Taiwan's green energy industry. Any advantage we had is gradually lost.

In sum, we support the Ministry of Economic Affairs gasoline and electricity price rationalization policy. We believe that CNPC and Taipower should end its disguised gasoline and electricity subsidies. The Taiwan region lacks an abundance of energy. But it has achieved much in ICT energy-saving technology. Gasoline and electricity prices must not be at the mercy of populist whim. They require industry foresight, energy efficiency goals, and the concept of "user pays." Gasoline prices must reflect market signals. Market signals must direct the allocation of resources. New York Mayor Rudy Giuliani has a famous saying: Between doing the right thing and doing things to please people. one must always choose the former. Only by doing the right thing, can one please people. We say these things to support the Ministry of Economic Affairs. We say these things to chastise populist politicians.
  
油電價格偏低 社會成本沉重
【聯合報╱社論】
2012.04.06 02:04 am

經濟部調漲汽柴油價格，漲幅分別是九五無鉛汽油每公升3.1元，柴油每公升3.2元，燃料油每公秉2440元。有些媒體記者在街上隨機訪問計程車司機與加油市民，大多數受訪者一如預期，都是對漲價充滿埋怨。不久之前，在立法院的總質詢中，若干民意代表也一再對行政院提出質詢，反映人民擔心漲價的心聲，希望中油台電等國營事業繼續吸收虧損。經濟部在立法院質詢接近尾聲之際才提出漲價之議，大概是為了減低民意衝擊不得不然的策略。

但是，如果政府政策就只能在這麼淺層的「民意期待」邏輯中思考，那麼所醞釀出來的政策，就必然欠缺論述基礎。台灣作為一個天然資源嚴重缺乏的國家，無論如何都沒有實施「全世界最低油電價」的條件。既無低油價客觀條件，卻偏偏要實施低油價，那就一定表示背後犧牲了若干社會成本。行政院若不能將這些社會成本陳述清楚，就始終是在「贊成漲價」與「反對漲價」的正反民粹勢力中拉鋸；思考既不能提升、政策也不夠理想。以下，就讓我們替經濟部做個功課，把低油價的社會成本逐一闡明。

首先，低油電價當然表示中油台電在虧損，這虧損得由國庫貼補。由於國庫貼補來自稅收，而稅收來自全體人民，因此整體而言，低油電價格表示用油用電較少的人，在補貼用油用電較多的人。這不但不符合使用者付費的原則，更是直接悖離了資源分配的公義。因此，「不符公義」是低油價政策的第一重社會代價。

低油電價格政策的第二重代價，就是對馬總統節能減碳政策的反挫。經濟學上有若干學理或許卑之無甚高論，但「以價制量」卻是個鮮少受到挑戰的概念。在2008年馬總統就任之初，內閣提出具有節約機制的高電價方案，其結果則是省電風氣大行，在短期內即省下一座通霄電廠的發電量。可見，用電用油量一定是與油電價格反向相關的。如果行政院真如在野黨立委所建議的，持續採取低價政策，則台灣的節能減碳絕對難以推動、我們的產業碳足跡必然難以改善，而馬總統承諾的二氧化碳減量目標，也一定難以達成。

低油價低電價還有第三種成本，一般人不容易察覺，但綠能科技產業者卻一定是心有戚戚焉。台灣在ICT智慧電網、LED省電燈泡、太陽能板製造、家戶智慧電表等各方面，都有相當的基礎。但是，這方面的基礎要能擴散，就一定要取得關鍵零組件的產製優勢、或是系統營運服務的操作優勢。然而，究竟有多少廠商願意投入前述關鍵零件或系統營運的研發，就要看綠色能源與傳統油電能源的相對價格高低。當傳統石化油電價格越高，則綠色能源的使用與研發就越有吸引力、台灣廠商投入的意願就越高、而他們在這些方面就更能取得全球產業優勢。簡言之，傳統能源價格越低，就越不利於台灣綠色能源產業的發展，使我們原本具有的優勢，逐漸流失。

綜合上述，我們支持經濟部油電價格合理化，也認為中油台電應該停止目前變相補助油電價的政策。台灣絕非能源豐沛的地方，卻是在資通訊節能科技方面著有成績的國家。我們討論油電價格，絕不能在民粹氛圍中打轉，而要有產業前瞻、有節能目標、有使用者付費的理念堅持，絕對要讓油價電價發揮其市場訊息、引領資源調配的功能。紐約市長朱利安尼有句名言：在「做對的事」與「做討好人的事」之間，要選擇前者；而唯有做對的事，行政當局終究才能成功地討好人民。這些話是對經濟部的支持、也是給民粹式民意代表的棒喝。