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High Oil Prices Fire Up Output
High crude oil prices are giving Chinese firms an incentive to pump more oil, according to Tuesday's Chinadaily.
Many Chinese fuel consumers predict that fuel prices will rise even further at home, and they are none too pleased, the paper said.
The State Development Planning Commission Monday lifted the average retail price of gasoline to 4,160 yuan (about 501.2 U.S. dollars) per ton from 3,980 yuan (about 479.5 U.S dollars) with the price of diesel oil going up to 3,564 yuan (about 429.4 U.S dollars) per ton from 3,264 yuan (about 393.3 U.S.dollars).
It was the seventh fuel price rise on the domestic market since November.
Analysts predict that world crude oil prices are likely to exceed 40 U.S dollars per barrel by the end of this year.
This is in spite of reports on Sunday that the Organization of Petroleum Exporting Countries will raise oil output by 500,000 barrels a day if prices remain above the top end of its target range of 22 U.S. dollars to 28 U.S. dollars a barrel.
However, oil refineries have suffered because of the high prices and consumers have also complained about the consecutive rises in fuel prices.
Although a high price benefits oil producers, it puts a squeeze on refineries and fuel consumers.
The oil industry's profits surged by more than 30 billion yuan to 40.3 billion yuan during the first half of the year, which oil analysts said was mainly helped by the high oil prices.
But those profits are not helping the end users. And the commission announced last month that it will readjust domestic fuel prices every month according to changes on the world market.
It says fuel price increases are merely designed to bring domestic oil product prices more in line with world levels.
"Chinese oil producers should channel more of their profits into oil reserve prospecting and exploration when the prices are at a high level," said Yang Jingmin, a senior researcher at the Development Research Center of the China National Petroleum Corporation, one of the country's two largest oil giants.
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