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Beijing Slashes Price of Gasoline
Beijing Monday cut prices for refined oil for the second time this year following continued reductions in the price of oil on the international market.
The local government dropped the price for 93-octane gasoline, the most commonly used vehicle fuel in China, to 2.82 yuan (US$0.34) per liter from January's 2.96 yuan (US$0.36) per liter.
The price for 90-octane gasoline slid from 2.76 yuan (US$0.33) to 2.63 yuan (US$0.32) per liter, and diesel also fell 0.17 yuan (US$0.02) to 2.64 yuan (US$0.32).
Beijing's new round of price adjustments coming ahead of the State Development Planning Commission's decision on this month's benchmark refined oil price, is in direct response to the worldwide decline in crude oil prices, said Shan Weiguo, a senior expert from the China National Petroleum Corp's Petroleum Information Institute.
But there is another factor. "The price drop was also partly made possible by the sufficient supply of refined oil currently flooding the domestic market," Shan said.
"Some customers have stockpiled refined oil in the past several months to fend off the impact of rising oil prices. Now they have released their inventories just as the price falls back," he said.
Sales of major refined oil retailers in the last two months fell to half of the level in September and October.
Gong Jingshuang, a senior engineer at the same institute, said the domestic price for refined oil this year will stay at a high level because the Organization of Petroleum Exporting Countries (OPEC) has decided to slash production to keep the crude oil price at a safe level of US$25 per barrel.
To hook the refined oil price to the international market, China has since June of last year set the nationwide benchmark price for refined oil every month based on the Platt's quotes for the Singapore market in the previous month.
Local retailers are allowed to raise or drop the price by 5 per cent from benchmarks.
After 11 rounds of price modification, the domestic refined oil price has risen over 40 per cent.
Sinopec Group, China's largest refined oil producer, experienced a surge in its annual profits equal to 160 per cent, or 20 billion yuan (US$2.4 billion), last year. (China Daily)
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