China will cut gasoline and diesel prices from Wednesday by 220 yuan (US$32.4) per tonne, or by about 3 percent each, the National Development and Reform Commission (NDRC) announced Tuesday.
The retail price of gasoline will drop by about 0.16 yuan per liter, and that of diesel by about 0.19 yuan per liter, the commission said in a statement issued after a news briefing.
The benchmark prices of gasoline would be reduced to 6,910 yuan per tonne, and that of diesel to 6,170 yuan per tonne.
The price cut was in response to recent falls in global crude prices, which had dropped to 63.97 U.S. dollars per barrel from 67.8 U.S. dollars on June 30, according to the statement.
Global crude prices, despite recent rebounds, experienced consecutive falls in the first half of this month, said the statement.
The NDRC is basing its adjustment of domestic fuel prices on three kinds of global crude prices, but the commission did not reveal the structure of the three prices.
On Monday, light, sweet crude for September delivery rose 33 cents to settle at 68.38 U.S. dollars a barrel on the New York Mercantile Exchange. London Brent for September delivery rose 50 cents to 70.82 dollars a barrel on the ICE Futures exchange.
It is the sixth fuel price adjustment since the country adopted a new fuel pricing mechanism, which took effect on Jan. 1.
The Chinese government has lowered retail fuel prices in December, before the new mechanism became effective, and again in January. It also raised prices once in March and twice last month.
Under the pricing mechanism, the NDRC would consider changing benchmark retail prices of oil products when the international crude price rises or falls by a daily average of 4 percent over 20 days.
The two price rises last month were slight, said the statement, in an effort to quell doubts over frequent price hikes.
The country's latest fuel price hike on Jan. 30 sparked widespread debate as consumers grumbled that the record domestic prices were even higher than in the United States.
However, according to the NDRC statement, post-rise prices on June 30 translated into about 60 U.S. dollars per barrel, which was 7.8 U.S. dollars lower than the international price that day.
On June 1, post-rise prices were equal to about 50 U.S. dollars a barrel, 7.6 U.S. dollars lower than the global crude price.
The NDRC raised pump prices of gasoline and diesel by 400 yuan per tonne, or 7 percent and 8 percent, respectively, from June 1, and again by 600 yuan per tonne, or 9 and 10 percent, respectively, from June 30.
Such controlled rises were meant to ease the burden of downstream industries so as to help fuel a recovery in the economy, and also to cushion the negative effect of irrational rises in global crude prices, such as rises in investment of speculative capital, according to the statement.
The commission would continue to adjust domestic fuel prices "at an appropriate time", and take into account of changes in global crude prices, domestic economic situation, and demand and supply on the domestic market, said the statement.
(Xinhua News Agency July 28, 2009)
