The fuel shortage affecting Guangdong is dragging on, but the situation in Guangzhou has improved since earlier in the week when hundreds of drivers queued up at the city's pumps.

Zheng Xiaoming was happy with the good fill-up of his car in Guangzhou yesterday afternoon before he drove back to Zhongshan, a city about 70 kilometres to the south in South China's Guangdong Province.

"It took me only about 20 minutes to fill up just now at a filling station in downtown Guangzhou," said Zheng, a high school headmaster in Zhongshan who was in town for a meeting.

"I spent more than two hours waiting for a chance to refuel my car in Zhongshan yesterday afternoon, and I only managed to get 150 yuan (US$18.5) worth of 93-octane petrol, hardly enough for my drive to Guangzhou.

"The oil supply shortage is as serious as ever."

Unlike the case in other Pearl River Delta cities, the refined oil shortage in Guangzhou has improved gradually since Wednesday.

Long queues outside petrol stations are no longer common sights in the city. Almost all the 500-odd petrol stations in the city have been able to supply some kind of refined oil.

Having investigated the oil supply at dozens of filling stations in the city yesterday, Guangzhou Vice-Mayor Lin Yuanhe said that the situation is on its way back to normal. He said the China Petroleum & Chemical Corp (Sinopec), the leading supplier of refined oil to the Guangzhou market, has increased the supply of refined oil to 3,000 tons each day from the former 1,900 tons.

The vice-mayor said the oil supply would be adequate for the city's consumption needs in the next few days and residents no longer needed to store petrol for future use.

But Guangdong's situation has caused a general outcry of how China's oil supply is managed even as refinery officials offered reasons for the latest shortage.

Sinopec blamed soaring crude prices, which have reduced the refiners' production, and the latest typhoons along the eastern coast, which have paralysed oil shipments from north to south.

"We rely on shipping for most of the refined oil transportation from the northern refineries and stockpiles to the south," Sinopec spokesman Chen Ge said.

Chen said that as the weather improves, so will the oil supply. But he did not set a timetable.

Some industry analysts say the supply problem stems from the central government-controlled oil pricing system, which lags far behind changes in the world market.

"In the long run, the country needs to float domestic oil prices more closely to the world level to channel oil consumption into an energy-saving model, which in return will contain demand and balance the market," said Ni Weidou, chairman of Tsinghua-BP Clean Energy Research and Education Centre.

He Jun, chief analyst of Beijing Anbound Consulting Co, said the oil shortfall demonstrates the problems of having Sinopec and PetroChina controlling the oil market.

"The government should smash the duopoly by introducing more market players in the oil sector including privately owned oil companies and foreign firms," he said.

A more flexible pricing mechanism for oil products is also urgently needed, he said.

The opening-up to foreign competitors of China's refined oil wholesaling market by the end of next year in accordance with entry into the World Trade Organization will help smooth the market chains, He added.

(China Daily August 19, 2005)