The city's transport fuel stockpile and supplies are stable despite some privately owned gas stations facing shortages, according to the Shanghai Economic Commission.

Shanghai's diesel stockpile is enough for more than 10 days' use following the production of more than 620,000 tons of diesel last month by two major local refineries, a commission spokesman said in a statement on the city government's Website over the weekend.

High crude oil prices in global markets and increased demand have resulted in diesel shortages in some privately owned gas stations in Shanghai and neighboring regions recently, a repeat of last November's supply shortage.

Long queues of buses and trucks have been seen at many gas stations outside central Shanghai over the past week, causing traffic congestion.

In China, fuel prices are set by the government and record high crude prices are causing the refineries to lose money.

Many independent oil refineries have chosen to cut back or stop processing, while Sinopec and PetroChina, the nation's two dominant state refineries, are reported to have halted sales to independent dealers last week in some areas of the country as they have to ensure supplies to their own outlets.

"At this moment, we have to ration diesel at our stations because we have to absorb the demand previously supplied by private stations," a spokeswoman for PetroChina's Shanghai sales branch said. Private stations account for a little more than 10 percent of Shanghai's total stations.

The Economic Commission said state oil companies have been arranging more supplies to the 440 stations that supply diesel in Shanghai. It is asking them to give preference to sectors such as farming, public transport, urban construction, food transportation and hospitals.

The commission said it will set some gas stations aside for use by buses only to improve efficiency and ease congestion, and it asked the public to be understanding. It also warned stations not to hoard diesel.

A shortage hit Shanghai, Guangdong and other regions in China late last year. For the first time in 17 months, the government had to increase gasoline and diesel prices in November to encourage more processing. However, analysts say the nine to ten percent increase is not enough to cover refineries' losses.

PetroChina said last week it had appealed to the central government for a further price increase.

(Shanghai Daily March 24, 2008)