The Chinese government has urged local officials to ensure sufficient fuel supply and monitor food prices more closely.

The move is aimed to guarantee market stability after the country raised fuel prices in a response to the surge in global crude oil costs.

Those who indulge in illicit price-fixing or spread rumors about the recent fuel increase will be "severely punished," Xinhua news agency said on Saturday, citing a circular from China's top economic planning body.

While public bus fares will not be increased, taxi fares in Shanghai will "definitely" rise, a city newspaper reported over the weekend.

In a circular posted on its Website, the National Development and Reform Commission urged local governments help minimize the impact on urban residents by extending temporary subsidies for the poor or raising subsistence payments.

The circular said when raising fares on long-distance buses and taxis, local governments have to strictly control the range of increase within a margin only to offset rising costs.

Local governments must prevent companies unaffected by the fuel price increase from raising service charges, it said.

Railway transport, city public buses and rural road transport are not subjected to price change.

The central government has started to distribute subsidies and local governments are urged to move fast to pass down the money to operators to make up for their losses.

The price increase of liquefied gas may lead to cost rises in student canteens across the country, the circular said. Thus, local governments should consider subsidizing canteen operators.

And refiners must increase output of oil products, natural gas, liquefied gas, and particularly diesel, to meet rising market demand.

Gas stations in many cities, including Shanghai, were limiting diesel sales in the past several weeks as fuel shortages were reported throughout China.

After about a month, Shanghai citizens will certainly face a rise in taxi fares, the Oriental Morning Post reported.

Taxi authorities are now doing the research and calculations, it said.

Shanghai adopted a price-fixing mechanism for the taxi industry last May. The rule allows the transport authority to adjust fares according to the fluctuation of fuel prices.

When the city increased the starting price - covering a three-kilometer trip in local taxis - from 10 yuan (US$1.34) to 11 yuan on May 11, the fuel price was 4.13 yuan per liter. Now, the fuel price has been increased to 4.77 yuan per liter.

Shanghai has about 45,000 taxies run by more than 100 companies. It will take about a month to adjust meters.

(Shanghai Daily November 5, 2007)