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Fuel prices jump to aid battered refiners
Latest Updated by 2006-03-27 15:45:31

Pump prices of gasoline and diesel rose more than 5 percent in Shanghai yesterday.

The liquefied petroleum gas price also rose as China raised the wholesale price of oil products for the first time since July.

The National Development and Reform Commission, the top economic planner, said the rises would help cover losses for refiners caused by the surge in global prices for crude oil.

The central government will subsidize selected industries including fisheries, state-owned forestry companies and public transport.

Grain farmers will get subsidies to offset higher prices of diesel, chemical fertilizer and other agricultural production materials.

Oil companies won't be allowed to raise the price of diesel for fishing.

The commission said local authorities can raise taxi fares or offer subsidies.

It said the producer price of gasoline rose 300 yuan (US$37) to 4,700 yuan a ton and diesel 200 yuan to 3,870 yuan yesterday.

In Shanghai, the planning agency raised the retail price for No.90, unleaded, low octane, gasoline to 4.13 yuan a liter from 3.93 yuan, and for zero-grade diesel to 4.16 yuan a liter from 4.03 yuan.

The price for liquefied petroleum gas rose to 3.10 yuan a liter from the previous 2.97 yuan.

Some local drivers accused gas stations of hoarding fuel ahead of the price rise.

"They told me they were out of petrol at 9:20pm Saturday but when I came back just after midnight they filled my car," said Li Changping, 50, referring to a gas station on Siping Road.

Another driver, Li Ming, said three stations in Jinshajiang Road told him on Saturday they had no fuel.

"I suspect these stations were cheating because they could sell at better prices next day," Li said.

An official from Sinopec's Shanghai sales branch said they don't allow hoarding and may investigate.

China has increased fuel prices about 20 percent since the start of 2005. Global crude oil prices have soared 48 percent over the same period.

"The wide pricing gap between global oil rates and domestic refined products has been affecting market supply and steady economic development," the commission said.

The commission sets street prices for refined oil products such as gasoline and diesel. Any increase usually lags the free-market price of crude.

State-owned Sinopec and China National Petroleum Corp are allowed to set retail prices of gasoline and diesel and fuel supplied to commercial airlines and the transport sector at 8 percent above or below the government's recommended prices.

The commission is studying reform of the pricing system to better reflect global price changes.

Crude rates hit a record US$70.85 a barrel on the New York Mercantile Exchange on August 30.

Last summer, when fuel shortages hit parts of the southern Guangdong Province, reports said companies were sending fuel offshore where prices were higher.

China's refiners reported losses of 30 billion yuan last year compared with 20.8 billion yuan profit in 2004.

Sinopec in October posted a 20 percent drop in third-quarter profit. It was the first quarterly drop since 2003 for Sinopec, which is scheduled to report full-year earnings today.

Editor: Yan

By: Source:Shanghai Daily web edition
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