Learn Chinese: Chinesepod - China raises oil prices to help refiners

Thursday, December 20, 2007

Chinesepod - China raises oil prices to help refiners

CHINA / Foreign Media on China

China raises oil prices to help refiners
(Bloomberg)
Updated: 2006-03-26 14:13

China, the world's second biggest energy consumer, raised prices of oil
products for the first time in eight months to help refiners cover costs
after crude oil prices surged to record levels.

From today, ex-factory gasoline prices were increased by 300 yuan ($37) a
metric ton and diesel prices by 200 yuan per metric ton, the National
Development and Reform Commission, the nation's top economic planner,
said today in a statement on its Web site.

The central government, which controls diesel and gasoline prices to
limit their impact on inflation, is authorizing higher prices to help the
nation's refiners cover rising oil costs.

Oil reached a record of $70.85 a barrel on the New York Mercantile
Exchange on Aug. 30 and has risen 17 percent over the past year. China's
government last adjusted fuel prices on July 23.

"The wide pricing gap between international oil prices and domestic
refined products is affecting market supply and steady development of the
economy," the commission said in the statement. ``China's economy is
growing at an accelerated pace and demand for oil continues to rise.''

Ex-factory prices of gasoline supplied to the government's reserves rose
to 4,700 yuan a ton from 4,400 yuan, diesel prices to 4,070 yuan from
3,870 yuan, military-use kerosene to 4,090 yuan from 3,890 yuan, and
aviation gasoline to 4,840 yuan from 4,530 yuan, the statement said.

The government also raised ex-factory prices for jet fuel to between
4,840 yuan a ton and 5,470 yuan a ton, without providing comparative
numbers, the statement said.

Subsidies

Companies such as China National Petroleum Corp. and China Petrochemical
Corp., the nation's two biggest oil companies, are allowed to set retail
prices of gasoline and diesel and fuel supplied to commercial airlines
and transport sector at 8 percent above or below the government's
recommended prices, the commission said.

Oil companies won't be allowed to make the adjustments for retail prices
of diesel sold to the fishery industry, it said.

In a separate statement, the commission said it will set up a subsidy
system for selected industries including fishery, state-owned forestry
companies and public transportation companies, to compensate for the
price increase.

Farmers who grow grains will get subsidies to compensate for the impact
caused by the higher diesel oil and chemical fertilizer costs, the
statement said, without stating the amount. City government can offer
subsidies to taxi driver to help reduce the effect of the increase in
fuel prices, it said.

Euro III

To help refiners cover the higher costs of processing fuels to meet
``Euro III'' emission standards in Beijing, the recommended retail price
of gasoline was raised by 460 yuan a ton, and diesel by 340 yuan a ton,
compared with a gain of 250 yuan a ton for gasoline and 150 yuan a ton
for diesel countrywide, the statement said. The ``Euro III'' standards
are automobile emission restrictions that the European Union adopted in
2000 to regulate the amount of sulfur in gasoline and diesel.

In Beijing, retail prices for 93 RON grade gasoline rose to 4.31 yuan a
liter from 3.94 yuan, and zero-grade diesel prices increased to 4.04 yuan
a liter from 3.74 yuan, the capital city's planning commission said in a
separate statement. RON is the research octane number that indicates the
quality of the gasoline.

The U.S. is the world's biggest energy consumer.

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Thursday, December 20, 2007

Chinesepod - China raises oil prices to help refiners

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