China raised the retail prices of gasoline by 300 yuan (47.8 U.S. dollars) per tonne and diesel by 290 yuan per tonne starting from Feb. 25.
The benchmark retail price of gasoline was lifted by 0.22 yuan per liter and diesel by 0.25 yuan per liter, the National Development and Reform Commission (NDRC) announced, making it the first oil price adjustment in 2013.
Under China's oil product pricing system introduced in 2009, domestic fuel prices may be adjusted when crude oil prices in Brent, Dubai and Cinta change by more than 4 percent over 22 working days.
Price rises in the three areas met such requirements on Feb 21, with the moving rate exceeding 4.85 percent, according to the price monitoring system run by Xinhua News Agency. >>>More
A staff member checks an oil price indicator at a gas station in east China's Shanghai Municipality, Feb. 25, 2013. The benchmark retail price of gasoline will be lifted by 0.22 yuan per liter and diesel by 0.25 yuan per liter, the National Development and Reform Commission (NDRC) announced on Feb. 24, making it the first oil price adjustment in 2013. (Xinhua/Ding Ting)
International crude oil prices have been rising since the beginning of the year. By Feb 18, the Brent oil price, one of the prices that China refers to for fuel price adjustments, had increased by 5.45 percent compared with the beginning of January.
During China's lunar New Year, earlier this month, the Brent crude prices reached $118 a barrel, a record high in nine months, which led to the growth of average movement of the three reference markets, namely Brent, Dubai and Cinta's oil prices. >>>More
"At present, the major countries adopt easy monetary policies to stimulate the economy, which has boosted the oil price rise," said Li Hong, an analyst at SunSirs. "The high oil price will hurt investor expectations of the economic rebound. It is difficult to predict whether retail fuel prices will continue to rise in March or not."
Prompted by weak domestic demand in recent months, the fuel inventories in refineries are high, and are sufficient for market supply. Although the busy season for diesel consumption is approaching, the shortage is not likely to happen, according to SunSirs.
Li said the price rise will be beneficial for the country's two top refiners, Sinopec Group and PetroChina. It will also provide profit opportunities for local refineries. >>>More
A staff member adjusts an oil price indicator at a gas station in Hefei, capital of east China's Anhui Province, on Feb. 25, 2013. The benchmark retail price of gasoline will be lifted by 0.22 yuan per liter and diesel by 0.25 yuan per liter, the National Development and Reform Commission (NDRC) announced on Feb. 24, making it the first oil price adjustment in 2013.
Although the adjustment is based on movements in the international market, the price-setting NDRC has been accused by some consumers of compromising public interests in favor of those of the privileged oil giants in its decision-making. There have also been calls for more market-guided reforms in the sector.
Under the current mechanism, the NDRC can delay raising prices when inflation is running high, but it also creates room for unfair plays that may hamper efficiency in resource allocation.
Given the country's severe energy outlook, China has decided to let the market play a more central role in the price setting.
Lin Boqiang, an energy expert at Xiamen University, pointed out several possible areas for reform, including shortening the adjustment period from 22 working days to 10, narrowing the range requirements from 4 percent to 2 percent, and allowing oil producers to adjust prices instead of the NDRC.
In this way, price changes will be more timely and frequent, but the public will view the changes more rationally as only the market has the final say, the academic noted. >>>More
