China will offer subsidies to domestic oil companies to offset
high international oil prices amid efforts to ensure market
supplies, the nation's top economic planning agency said on
Wednesday.
Many gas stations across the country are experiencing shortages,
with refineries unwilling to raise output in light of the low,
government-controlled domestic fuel prices.
Experts said the government should reform the oil pricing
mechanism to reflect international levels and allow oil firms to
transfer cost to customers.
The government will offer oil firms some profit rebates and
scrap oil import duties to compensate them for losses at their
refinery units, the National Development and Reform Commission
(NDRC) said.
China raised the prices of gasoline, diesel and aviation
kerosene by 500 yuan (67.6 U.S. dollars) per ton, almost a 10
percent rise, starting from November 1.
Light, sweet crude for January delivery on the New York
Mercantile Exchange was down 99 cents to 88. 32 U.S. dollars a
barrel on Dec. 4. The price has risen about 50 percent so far this
year, despite a recent retreat from it record high of 99.29 U.S.
dollars a barrel last month.
The losses at oil refineries are still huge despite the fuel
price rise and many local refineries still halt or reduce output,
the NDRC stated.
As a result, supplies of fuel, in particular diesel, are still
tight and some gas stations are still without supplies or only
provide limited supplies, according to the NDRC.
China's oil consumption has been rising rapidly with the booming
economy. Its crude consumption has jumped 6.8 percent year-on-year
to 173.03 million tons in the first half of 2007, according to
official figures.
To ease the shortage, PetroChina and Sinopec, the nation's two
largest oil producers, are running at full capacity to increase
output, especially that of diesel, and trying to draw on stockpiles
as much as possible.
The NDRC ordered local authorities to step up market supervision
and crack down on gasoline retailers that withhold stocks and raise
prices without government authorization. It also ordered the
setting up of an early warning system to tackle emergency fuel
shortages.
(Xinhua News Agency December 6, 2007)