The State Development Reform Commission on Wednesday
raised benchmark gasoline rates by 300 yuan (US$36.30) per ton, or
8 percent, but kept diesel prices unchanged.
In Beijing, retail gasoline prices rose to a four-year high
Wednesday. The benchmark 90-octane rose to 3.23 yuan (39 US cents)
per liter from 2.99 yuan (36 US cents), while the 96-octane
increased to 3.46 yuan (42 US cents) from 3.20 yuan (39 US
cents).
The price adjustment was made to catch up with the rise in
international crude oil prices. The US crude price has hit a
13-year high, rising above US$38 a barrel on worries about global
supplies. Prices at the pumps in New York touched an 18-year
high.
China has pegged its domestic refined oil products to average
rates in Rotterdam, New York and Singapore. Sinopec and PetroChina,
the only two authorized gasoline and diesel wholesalers, are
allowed to raise or lower their retail prices by 8 percent from the
government-set benchmark.
Gong Jingshuang, of the China National Petroleum Corp. Economic
Research Center, said that demand for oil products will remain
strong in the second quarter despite the price increase.
"The seasonal demand rise in the second quarter will help keep
consumption high," said Gong.
A thriving auto market, together with rising investment in
power, infrastructure and construction, is causing demand for oil
products to soar. Chinese refineries have been running at top
capacity for months, leading to a surge in crude oil imports in the
first two months this year.
China, now the second largest oil consumer in the world,
imported 10.5 million tons of crude oil in February, a 60.1 percent
year-on-year jump.
Qi Jingmei, an economist with the State Information Center, said
the price hike will pass the costs to millions of car users and
will in turn mean rising prices in service industries.
"The oil price hike, along with price increases in grain,
electricity, steel and coal, will add inflationary pressure," said
Qi. "But in the long run, price increases are inevitable when the
economy is growing so fast."
(China Daily April 1, 2004)