Gas Prices Ignite AgainThursday's fuel price increase by the Chinese Government demonstrated its strong commitment to bringing domestic oil product prices in to line with the rest of the world.The State Development Planning Commission has increased the retail price of 93-octane gasoline, the most used vehicle fuel in China, to 3.20 yuan (US$0.39) from 3.07 yuan (US$0.37) per litre. The price of diesel oil has also risen to 2.90 yuan (US$0.35) from 2.76 yuan (US$0.33) per litre. Fuel dealers are permitted to raise or lower their prices by no more than 5 per cent from the benchmark levels, the commission said. This is the sixth price increase on oil products in the domestic market since last November. Li Shensheng, deputy director of the Economic Research and Consulting Centre under the State Economic and Trade Commission, attributed the consecutive price increases to high oil prices. Domestic oil prices have surged in line with world oil price hikes this year. The central government has allowed domestic oil prices to fluctuate according to world market changes since 1998. World oil prices have stabilized at around US$30 per barrel from less than US$10 in March, 1999. "With the country's approaching entry into the World Trade Organization (WTO) we must allow the domestic fuel prices to sway in accordance with the world market variations,'' Li said in an interview with Chinadaily. China will cut its tariffs on fuel imports by a large margin, to about 6 per cent, within the first one to two years after it joins the WTO. Industrial analysts believe that the government will depreciate the fuel prices once the world oil prices plunge. However there are no indications that oil prices on the world market will fall significantly in near future. It has been said that the new fuel prices are in part to aid domestic oil refineries, who have suffered badly due to the high oil prices, although the commission has denied that the increases have been designed as relief for the refineries. Domestic consumers are feeling the effects. "It is more difficult to make money because I have to pay 300 yuan (US$36.14) more a month for fuel than before,'' complained Beijing taxi driver, Zhao Jianjun. "I think the government has increased fuel prices simply in preparation for the long-planned fuel tax,'' Zhao said. According to Xiang Huaicheng, the country's finance minister, legal procedures for the fuel tax have been finished and it will take effect when time is right. A ministry source has said however, that the fuel tax is unlikely to come out this year because of the high oil prices. When it does arrive, the fuel tax is expected to further increase fuel prices and add to the burden on those who use their vehicles frequently like Zhao. |
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