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Fuel-price drop good news

Updated: 2011-10-09 08:02

By Lan Lan (China Daily)

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BEIJING - Gasoline and diesel prices are reduced for the first time this year beginning Sunday, as oil and gas prices in international market continue to fall.

The wholesale price of regular gasoline and diesel prices declines by 300 yuan ($47) per ton, according to the National Development and Reform Commission, China's top economic planner.

The decrease would cut the benchmark retail price of gasoline by 0.22 yuan per liter and diesel by 0.26 yuan per liter.

The price cut was welcomed by Chinese commuters as fuel prices reached their highest points since a hike in April and stayed unchanged despite the price fluctuations in international market.

Gao Shuguang, a taxi driver in Beijing, said his car consumes about 22 liters of gasoline each day and the price cut will save him about 150 yuan per month.

Before the official adjustment, some small gasoline stations in Beijing had offered discount for fuel prices last week, indicating the prices should be lowered, he said.

International crude oil prices continued to fall in trading during the previous two weeks, with WTI crude oil price fallen to $75.7 and Brent crude declined to $99.8 a barrel on Tuesday.

"Finally the fuel prices went down. The high prices have made consumers worry, which also levied great pressure on the government," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

Under an oil pricing mechanism started in 2009, the government considers adjusting domestic refined oil prices when international oil prices change more than 4 percent within 22 working days.

Since then, China has adjusted fuel prices 16 times, with 10 price hikes and six reductions.

Cao Changqing, head of the price department of the National Development and Reform Commission, said the price cut of product oil would help to reduce operational costs and ease pressures caused by rising consumer prices.

Meanwhile, he said the current pricing system has exposed problems such as lengthy cycle and lack of transparency. As a result, the domestic fuel prices do not synchronize with international prices.

A more market-oriented mechanism is under study, he said, without giving a timetable.

Both global and domestic oil markets are likely to see more frequent fluctuations in the future, Lin said, adding that the government should make the system more adaptable.

Customers should be allowed to participate in pricing design and reasonable subsidies for customers should come out as soon as possible, he added.

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