The government ruled out any immediate increase in fuel prices on Friday despite increasing market speculation about a possible hike, top pricing officials said.
Officials at the National Development and Reform Commission (NDRC) said the recent oil price rise on the global market indicated that the domestic fuel prices should be raised.
But Xu Kunlin, deputy director of NDRC's pricing department, told a news briefing on Friday that the authorities would only increase prices after further careful consideration.
According to the fuel pricing mechanism announced on Friday, China will adjust its fuel prices when global crude oil costs fluctuate more than 4 percent over 22 straight working days.
The global crude oil price has been increasing since March, rising from US$35 a barrel to around US$58 on Thursday.
This was the first time the government made public its fuel pricing mechanism since it announced last December that it would link domestic gasoline and diesel prices to the international market.
Xu said many oil traders had engaged in speculative dealing in recent days amid rumors of a price hike. "To prevent speculative trading, we will not adjust oil prices exactly in line with the benchmarks set in the regulation."
"And of course, we will not increase the prices today (Friday) so that they can profit from speculation," Xu said.
The government raised the benchmark retail price of gasoline by 290 yuan (US$42) per ton, or 5 percent, and diesel by 180 yuan per ton, or 3.7 percent, on March 25.
Xu said the price revisions show the new pricing mechanism that took effect on Jan 1 means the government can respond accordingly to international oil price changes.
He said the government would take the global economic situation into account when deciding the adjustment of oil prices. "For example, if the US economy continues to worsen and oil prices come down, we will not increase prices in the short term."
To prevent speculation, Xu ruled out announcing the timing of oil price adjustment in advance. "I don't think we need transparency in this regard."
Cao Changqing, director of the NDRC pricing department, said the Chinese government has tracked the trend of several oil markets worldwide.
China only monitored the oil price in Singapore in the 1990s. "We've learnt a lesson from that because that created many massive profit-making opportunities for speculators," he said.
PetroChina said on its website that China's ex-factory gasoline and diesel prices are linked to the prices of Brent, Dubai and Cinta crude oil, and it will also take into account transportation, processing, tax and refining costs.
(China Daily May 9, 2009)
