Fuel prices up in China

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Fuel prices up in China

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China raises fuel prices 3-4 percent to record highs.

07 February,2012 09:27 pm

China on Tuesday raised its ceilings on gasoline and diesel prices in response to rising prices in international markets.The move, disclosed on Tuesday by Chinas top economic planning body, comes as Beijing continues to balance its efforts to protect consumers from the rising cost of oil with its desire to tame growth in energy consumption and make its booming economy more energy efficient.The National Development and Reform Commission said it would raise gasoline and diesel prices by 300 yuan ($47.50) per metric ton, effective midnight Wednesday. This represents an increase of 3.3% and 3.6% over the current average gasoline and diesel retail ceiling benchmarks of 9,080 yuan and 8,230 yuan, respectively, according to Dow Jones Newswires calculations. The exact price ceiling varies by geographic location throughout China.The move may indicate that authorities are growing less concerned about inflation. Beijing sometimes delays fuel price adjustments when it fears that increases could add to inflationary pressures.The National Bureau of Statistics will release data for Januarys consumerprice index on Thursday. Economists expect that the CPI rose by 4.1% from a year earlier, unchanged from Decembers rise, according to the median forecast in a survey of 15 analysts. That would be down from a peak rate of 6.5% in July of last year.Beijing faces competing priorities as it considers energy prices. Inflation has slowed but remains a key concern for the nations leaders because it can lead to political unrest. At the same time, China has begun to take further measures to curb its pollution problems, including improved monitoring and incentives for more fuel-efficient cars, and last year said it could accept binding global emissions reductions after 2020.In November, China raised electricity prices for businesses nationwide and unveiled a system for raising prices for the heaviest residential users, part of efforts to wean the economy off over-dependence on energy-intensive industry.In December, the government launched a test reform in two provinces that would link natural gas prices more closely to market prices rather than keeping them artificially low.The NDRC last changed gasoline and diesel prices on Oct. 9, cutting them by 300 yuan per ton, in response to declining international oil prices.Under Chinas oil product pricing system, domestic fuel prices may be adjusted when the moving average of a basket of international crudes changes more than 4% over a period of 22 working days. The government hasnt always rigidly followed the formula, which was introduced in 2009.