The top environment official made his claim yesterday despite the passage of a non-binding motion at the Legislative Council urging government action on fuel prices.

The motion of Liberal Party chief Miriam Lau Kin-yee, which was amended by several lawmakers, calls on the government to immediately reduce fuel charges to match the international oil price cuts.

Lawmakers asked the government to actively consider implementing price regulation in the tendering of petrol filling station sites.

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They said it should also reduce the duty on unleaded petrol to alleviate the burden on vehicle owners.

Yau said the government cannot just set the price for oil companies or hastily set one for any individual commodity, because this would be against the free market principle and harm Hong Kong's business environment.

In response to Democratic Party lawmaker Fred Lee Wah-ming, who said the Oil (Conservation and Control) Ordinance of 1979 gives the government power to intervene with prices, Yau replied this should only be done when there is a fuel shortage.

"The fuel market is operating normally right now, and there are more competition now than before," he said.

"We don't think there is a current need to use this ordinance."

Hong Kong Association for Democracy and People's Livelihood lawmaker Frederick Fung Kin-kee criticized oil companies for raking it in by "raising the gas price fast but being slow in reducing it."

Yau said after a careful study, the government has found that there is still room for reduction. He said it has been urging oil companies to lower prices over the past few days.

Liberal Party lawmaker Tommy Cheung Yu-yan said high prices have led to a surge in the use of liquefied petroleum gas.

However, LPG retailers are also quick to raise their prices but slow to lower them, he said.

Yau said the government is willing to reflect lawmakers' suggestions to oil companies and ask them to review the domestic LPG price every month.

With the fall of international LPG prices this month, he expects the ceiling price to fall next month.