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Fuel price cuts spark debate on controls

By Wang Yu (China Daily)
Updated: 2007-03-15 08:40

Crude refining is not a profitable business in China, given the government's stringent price controls. To fend off supply fluctuations and inflation, the government keeps a tight grip on the price of major oil products and makes sure it is below the global level.

Of course, CNPC, which enjoys high profitability from oil exploration and production, can easily take a cut in its retail profit, Han said.

Market-set price?

The price cut from both joint venture and State-owned stations has reignited another debate: whether price control should be lifted altogether.

David Ernsberger, Asia editorial director of Platts, a global energy information and market research provider, said the oil pricing mechanism in China should be more market-oriented.

"A market-based pricing system will generate immediate effects on supply and demand Of course, there are challenges in the process of reform and it will take time and a thoughtful pace," Ernsberger said.

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