Chinese gas price controls need to be eased
Taipei Times - archives
BLOOMBERG
Saturday, Aug 20, 2005,Page 11
"The current oil pricing structure ... is not moving fast enough with the market."
Zhang Jingming, company secretary at Sinopec Shanghai Petrochemical Co
Chinese gasoline traders and manufacturers urged the government to ease price controls blamed for shortages in Shanghai, the nation's commercial center, and provinces including Guangdong, the biggest manufacturing hub.
Some retailers are limiting sales to avoid losses because they can't pass soaring supply costs on to customers, industry officials including Liu Jian, chairman of the Shandong-based Oil Product Trading Association of Qingdao, said yesterday.
An increase in gasoline prices would boost manufacturing costs and inflation in China. The nation's economy has tripled in a decade to US$1.6 trillion, more than doubling fuel demand and contributing to the surge in crude oil costs for refiners such as China Petroleum & Chemical Corp, Asia's largest.
"There's a greater need for the government to reform the current oil pricing structure, which is not moving fast enough with the market and international oil prices," Zhang Jingming, company secretary at Sinopec Shanghai Petrochemical Co, a unit of China Petroleum & Chemical, said by phone.
The National Development and Reform Commission, China's top economic policy planning ministry, controls fuel prices, allowing fluctuations of no more than 8 percent from the set level. The commission raised the price of 90 RON grade gasoline in Guangdong 16 percent this year to 4 yuan (US$0.49) a liter, lagging behind the 68 percent surge in the price of Dubai crude oil, Asia's benchmark.
The commission sent "significant additional" supplies to Guangdong to help cope with the crisis, China Central Television reported, quoting Li Yang, a commission official.
"We're sending truckloads of petrol to Guangdong, far exceeding the province's consumption needs," Li said in an interview on CCTV. "We hear the lines of cars waiting to buy gasoline have started shrinking."
Any decision to raise fuel prices further may accelerate inflation, increasing China's consumer price index by as much as 0.6 percentage points, and induce refiners to produce more gasoline, JPMorgan Chase & Co economist Ben Simpfendorfer said in a report on Thursday.
China's inflation accelerated in July for the first time in five months after the government raised fuel and electricity prices. The consumer price index climbed 1.8 percent from a year earlier after rising 1.6 percent in June, according to Beijing- based Mainland Marketing Research Co (China), which releases figures for the statistics bureau.
Energy companies' profits have been squeezed as price controls prevented them from passing higher crude oil and coal costs on to consumers.
BLOOMBERG
Saturday, Aug 20, 2005,Page 11
"The current oil pricing structure ... is not moving fast enough with the market."
Zhang Jingming, company secretary at Sinopec Shanghai Petrochemical Co
Chinese gasoline traders and manufacturers urged the government to ease price controls blamed for shortages in Shanghai, the nation's commercial center, and provinces including Guangdong, the biggest manufacturing hub.
Some retailers are limiting sales to avoid losses because they can't pass soaring supply costs on to customers, industry officials including Liu Jian, chairman of the Shandong-based Oil Product Trading Association of Qingdao, said yesterday.
An increase in gasoline prices would boost manufacturing costs and inflation in China. The nation's economy has tripled in a decade to US$1.6 trillion, more than doubling fuel demand and contributing to the surge in crude oil costs for refiners such as China Petroleum & Chemical Corp, Asia's largest.
"There's a greater need for the government to reform the current oil pricing structure, which is not moving fast enough with the market and international oil prices," Zhang Jingming, company secretary at Sinopec Shanghai Petrochemical Co, a unit of China Petroleum & Chemical, said by phone.
The National Development and Reform Commission, China's top economic policy planning ministry, controls fuel prices, allowing fluctuations of no more than 8 percent from the set level. The commission raised the price of 90 RON grade gasoline in Guangdong 16 percent this year to 4 yuan (US$0.49) a liter, lagging behind the 68 percent surge in the price of Dubai crude oil, Asia's benchmark.
The commission sent "significant additional" supplies to Guangdong to help cope with the crisis, China Central Television reported, quoting Li Yang, a commission official.
"We're sending truckloads of petrol to Guangdong, far exceeding the province's consumption needs," Li said in an interview on CCTV. "We hear the lines of cars waiting to buy gasoline have started shrinking."
Any decision to raise fuel prices further may accelerate inflation, increasing China's consumer price index by as much as 0.6 percentage points, and induce refiners to produce more gasoline, JPMorgan Chase & Co economist Ben Simpfendorfer said in a report on Thursday.
China's inflation accelerated in July for the first time in five months after the government raised fuel and electricity prices. The consumer price index climbed 1.8 percent from a year earlier after rising 1.6 percent in June, according to Beijing- based Mainland Marketing Research Co (China), which releases figures for the statistics bureau.
Energy companies' profits have been squeezed as price controls prevented them from passing higher crude oil and coal costs on to consumers.
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