China said it would raise benchmark retail prices of gasoline and diesel by 290 yuan (42.46 U.S. dollars) per tonne and 180 yuan per tonne, respectively, as of midnight Tuesday.
It is the second oil price adjustment this year. The National Development and Reform Commission (NDRC), China's top economic planner, cut benchmark pump prices of gasoline and diesel by 140 yuan and 160 yuan per tonne, or 2 percent and 3.2 percent, respectively, on Jan. 14.
Experts said more frequent price adjustments show China can respond more quickly to international oil price changes after a new pricing mechanism took effect Jan. 1, 2009.
The combined photo taken on Mar. 24, 2009 shows the price boards before (top) and after (bottom) the adjustment, in Beijing, China. China said it would raise benchmark retail prices of gasoline and diesel by 290 yuan (42.46 U.S. dollars) per tonne and 180 yuan per tonne, respectively, as of midnight Tuesday. (Xinhua/Gong Lei)
Oil price fell to 53.10 U.S. dollars a barrel in electronic trading on the New York Mercantile Exchange on Tuesday. On the previous trading day, it settled at 53.80 U.S. dollars a barrel, the highest price since Dec. 1.
Under the new mechanism, China's domestic prices are to be "indirectly linked" to global crude prices "in a controlled manner."
"The 'indirect link' would be based upon average global crude prices, while taking into account domestic production costs, taxation, and 'appropriate profits' of oil producers," deputy director of the pricing department of the NDRC, Xu Kuning, said.
Staff members fill up some vehicles before the adjustment at a gas station in Beijing, China, Mar. 24, 2009. China said it would raise benchmark retail prices of gasoline and diesel by 290 yuan (42.46 U.S. dollars) per tonne and 180 yuan per tonne, respectively, as of midnight Tuesday. (Xinhua/Gong Lei)
Government-set fuel prices were previously changed infrequently.
As a result, either Chinese drivers ended up paying more than those in other countries when crude prices dropped, or domestic refineries suffered huge losses when crude prices surged.
Last Dec. 18, when the international crude price dropped from a record 147 U.S. dollars a barrel to less than 40 U.S. dollars, the NDRC announced a move to cut pump prices by 900 yuan and 1,100 yuan per tonne for gasoline and diesel, respectively.
The new pricing mechanism was announced the following day and took effect at the beginning of this year.
In Tuesday's notice to raise pump prices, the NDRC urged the two state-owned oil producers, PetroChina and Sinopec, to increase oil production to meet demands.
It also urged local pricing regulators to strengthen supervision over oil prices and crack down on any price violations.
China's crude oil output reached 190 million tonnes in 2008, up2.3 percent year-on-year, the highest growth in three years, according to the China Petroleum and Chemical Association.
Imports of crude oil rose 9.6 percent year-on-year to 179 million tonnes last year, which accounted for 48 percent of total crude oil demand.Source: Xinhua