Economy

Nation hikes petroleum prices

By Xiao Wan (China Daily)
Updated: 2010-04-14 07:19

Beijing - China raised gasoline and diesel prices by 320 yuan ($47) per ton, or 4 to 5 percent, starting Wednesday.

The increase is the first price hike in five months and pushes domestic prices to new highs.

This equals a price hike of 0.24 yuan per liter of gasoline and 0.27 yuan per liter of diesel, said the National Development and Reform Commission (NDRC) late Tuesday.

The move is in line with increases in global crude prices. The moving average of international crude has changed more than 4 percent over a period of 22 working days, according to the NDRC.

This round of price hikes is mild, as domestic oil supply is not tight at present, said Dong Xiucheng, professor at China University of Petroleum.

Lin Boqiang, professor with Xiamen University, said the price hike would have little impact on the consumer price index, pushing it up by only 0.1 percent.

China adopted a new oil pricing system last year, under which domestic oil prices are adjusted when the moving average of a basket of international crude (Brent, Dubai and Cinta) changes more than 4 percent over a period of 22 working days.

The country's last price hike on refined oil products was on Nov 10, when gasoline and diesel prices were raised by 480 yuan per ton, or 7 percent.

Under the oil pricing system adopted in 2009, domestic oil prices are linked with global crude prices. However, it also started debate on whether the fuel price or the pricing system was reasonable.

It seems that each price hike is synchronized with the rise in international crude prices, but each price cut is always delayed, said an industry insider who did not want to be named.

Many industry insiders believe that global oil prices will fluctuate between $60 and $80 this year. At such a level domestic fuel prices will not rise much, they said.

China Daily