CHINA has raised fuel prices by 4-5 percent, the first increase since March, in response to a rebound in global crude oil rates.

The rise follows a series of three price cuts between May and July amid tepid growth in oil demand as the overall economy slowed.

The price for gasoline was increased by 390 yuan (US$61) per ton and diesel by 370 yuan per ton, the National Development and Reform Commission said yesterday.

In Shanghai, the ceiling retail price for 93-octane gasoline is now 7.56 yuan per liter, up from 7.25 yuan, 97-octane gasoline rises to 8.04 yuan from 7.71 yuan and zero-grade diesel is now 7.46 yuan, up from 7.14 yuan. The new prices, which vary among provinces, are effective from today.

As talk of a price rise circulated on the Internet yesterday, motorists began queuing up to fill their tanks before the midnight deadline. The official announcement came just before 9pm.

"Now price adjustments seem to be quite regularly, periodically and much more predictable than before," said 30-year-old Sam Cheng.

Under the current mechanism, the NDRC may adjust fuel prices when the 22-day moving average of a basket of international crude changes more than 4 percent from the previous adjustment, though it also looks at other factors such as inflation and supply and demand.

The basket of crude rose 7.20 percent as of Wednesday since China last adjusted prices on July 11, according to consultancy ICIS C1 Energy.

"This is the first time the NDRC increased fuel prices in a timely manner once the trigger point for doing so was met," it said.

The consultancy said the price rises could help turn the refining margins of fuel producers such as Sinopec Corp and PetroChina Co back into positive territory.

The NDRC had cut fuel prices three times since May, after raising them twice earlier this year.

The commission has been working to improve the frequency of fuel adjustments as part of efforts to make the current pricing system more transparent and predictable.

An NDRC official said last month it may still need time for a new mechanism to be rolled out, because "it cannot be done when crude oil prices are too high or when crude prices are below domestic crude production costs."

Lin Boqiang, an energy-sector professor at Xiamen University, said the government should seize the opportunity of moderate crude prices amid a global economic slowdown to launch the reform.

Global crude rates bounced back since the end of June on expectations that major economies will take stimulus measures to bolster growth and over concerns about supply disruptions.

Who Voted for this Story




Copyright © My China B2B - Cloud Edition  |  Powered by My China B2B  |  Qiao LAB - Shanghai High-Tech & Business Incubator