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Page added on December 22, 2010

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China to Raise Gasoline Prices by 4%

Consumption

China will raise gasoline and diesel prices tomorrow by as much as 4 percent to reflect international crude costs that have climbed to the highest in more than two years.

The price of gasoline will rise by 310 yuan ($47) a metric ton and diesel by 300 yuan a ton, the National Development and Reform Commission said in a statement on its website today, the third increase this year in the world’s second-largest oil consumer. Crude in New York has gained 8.6 percent since China last increased prices on Oct. 26.

“Crude prices in international markets this month reached the highest since October 2008,” the NDRC said. “However, taking into consideration the trend of prices and supply of refined oil products, the government did delay the price increase and limited its scale,” the commission said in a question-and-answer posting on its website.

Inflation in China, the world’s fastest-growing major economy, accelerated to 5.1 percent last month from a year earlier, the biggest jump in 28 months, driven by higher food costs. Chinese consumers are more concerned about rising prices than at any time in the past decade, the People’s Bank of China said on Dec. 15 in its quarterly survey of 20,000 households across the country.

The decision to increase gasoline, diesel and kerosene prices was taken after “careful consideration” in view of the rapid increase in overall prices in China, the commission said. The adjustment will add 0.07 percentage points to the monthly consumer price index, it said.

Price Controls

The retail price of N90-grade gasoline will be allowed to increase by up to 0.23 yuan per liter and N0 diesel by as much as 0.26 yuan a liter, the commission said. The ex-factory cost of No. 3 jet fuel will rise by 300 yuan per metric ton to 5,900 yuan.

China National Petroleum Corp. and China Petrochemical Corp., the nation’s biggest oil groups, and other refiners have been told to ensure prices are not increased by more than the ceiling set out by the government, the NDRC said. Local departments of the commission will step up monitoring of fuel prices and crack down on hoarding and price fixing, it said.

The government has made 13 adjustments since introducing a mechanism in December 2008 that allows the NDRC to revise fuel prices when crude costs change more than 4 percent over 22 working days. Futures in New York have risen 9.5 percent since Nov. 18.

Higher fuel prices may prompt refineries to boost production to ease a domestic supply shortfall. Chinese state oil companies are increasing processing in a bid to ease diesel shortages in the south and east as demand from farmers and factories rises.

Bloomberg



One Comment on "China to Raise Gasoline Prices by 4%"

  1. Kenz300 on Wed, 22nd Dec 2010 4:30 am 

    The subsidies for fuel around the world are getting more expensive at a time when countries budgets are stretched.

    Higher prices are coming. Either by reduced subsidies or increases in crude prices being passed along.

    Going forward energy will no longer be something people take for granted.

    It is time to start generating some clean, sustainable alternative energy close to home. Let’s develop sustainable communities with products, food and energy generated locally with local labor.

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