| Tools: Save | Print | E-mail | Most Read |
| Gasoline Prices Lowered, But Not Liberated |
| Adjust font size: |
Prices of domestic refined oil products may have been cut in line with lower global prices, but the era of real flexibility in the country's pricing system is still some way off. The National Development and Reform Commission (NDRC), the ministry-level body that plans the economy, announced on Saturday that it would cut the wholesale price of gasoline by 220 yuan ($28.21) per ton and the price of kerosene by 90 yuan ($11.54) per ton from yesterday. The move marked the first price-cut for refined oil products sold on the Chinese mainland since May 2005. The price of oil products had gone up 12 times since 2003, including twice last year, in line with soaring global oil prices, Xinhua News Agency reported. "The local price cut that took effect (on Sunday) was necessary and well-founded because crude prices have declined and the new oil-pricing mechanism is not yet available for public review," Han Wenke, director of the NDRC's Energy Research Institute, told China Daily yesterday. He said that because the wholesale market for oil products is still dominated by State-owned giants mainly the China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec) it is natural for the government to keep a tight grip on pricing. No new pricing system He added that the government would not adopt the new pricing system in the foreseeable future. "Although lower global oil prices will help pave the way for a new pricing system that is expected to track international crude prices more closely, the recent drop in (domestic) prices may not necessarily have been connected to that system," Han said. Zhou Dadi, the retired former director of the Energy Research Institute, echoed his successor's comments. "Even if a new pricing mechanism is adopted, State intervention in pricing will still apply in The government adjusts oil prices only when the international price changes by more than 8 per cent. For refiners, this can lead to major losses as they pay large export bills when international crude prices are high, but cannot raise prices of the products they produce, such as gasoline for automobiles. According to news reports, the NDRC had earlier been considering de-linking the price peg between local oil products and oil products sold in Instead, the top economic planner was said to be weighing the possibility of linking the prices of local oil products to crude prices in Brent, Analysts' view Analysts argue that the NDRC should adopt the new pricing system now, while global oil prices are low. Crude oil for February delivery fell to $ "Naturally, it would be easier for the public to accept a new pricing system that is designed to more accurately reflect global market conditions when the global price is low," said Han Xuegong, a veteran consultant for CNPC. Lower fuel prices will benefit Lee added that the recent price cut for local oil products could prove painful to major refiners, which have long had to contend with high import prices and low retail prices. However, Han said lower costs for crude imports and reductions in the windfall tax on oil earnings would soften the blow. A "The government should take into account the interests of both oil enterprises and ordinary consumers," Chai said. Xu Xiaobing, a (
|
| Tools: Save | Print | E-mail | Most Read |
 |
| Related Stories |
|
|
Product Directory China Search |
Country Search Hot Buys |
