The prices of major oil products have been raised 8 percent from
today to encourage loss-making refiners to step up production and
reduce shortages.
The National Development and Reform Commission (NDRC), the
country's top economic planner, announced last night that the
prices of gasoline, diesel oil and aviation kerosene would be
raised by 500 yuan (US$68) per ton.
That translates into motorists paying 0.4 yuan or 0.46 yuan more
per litre of gasoline or diesel.
The revision was made to reduce the gap between soaring global
crude prices and domestic fuel prices, the NDRC said.
"The gap between the prices of global crude and domestic oil
products is widening, leading to heavy losses for refiners. For
quite a period of time, certain regions have faced a shortage of
oil products or tight supply The price increase is expected to
reduce refiners' losses and ensure supplies," it said.
The price hike will lift the monthly consumer price index (CPI)
by 0.05 percentage point, the NDRC pointed out. Although the direct
impact of the price hike on the CPI is limited, the NDRC said it
will still try to fend off ripple effects on prices of other
products, such as grain, pork and edible oil.
The cost of rail cargo and air travel will go up correspondingly
but rail and public transport fares will remain unchanged.
The government may subsidize taxis for higher fuel cost.
The NDRC asked oil majors such as Sinopec and PetroChina to
raise refining output, increase diesel imports and strictly control
diesel exports.
The NDRC has long been keeping a tight lid on domestic fuel
prices to keep inflation at bay, only allowing refiners to set fuel
prices within an 8 percent band of a government-imposed benchmark.
But many small refiners - owned privately or by local governments -
have stopped production due to soaring prices of crude.
(China Daily November 1, 2007)
