Momentum building for rise in prices at China's gas pumps

 

 

 

 

 

 

 

 

 

 

 

 

ADDITIONAL details released yesterday on the government's fuel pricing mechanism combined with rising crude costs indicate that an increase at the gas pumps may be coming soon.

Under the mechanism, retail fuel prices can be adjusted when international crude costs move more than 4 percent over 22 consecutive working days, the National Development and Reform Commission said. Benchmark New York crude was quoted on Thursday at above US$57 a barrel, about 10 percent higher than on March 25 when China last raised the price of refined oil products.

 

 

 

 

 

 

 

 

 

 

 

 

"The rule says that the price 'can' be changed, but not 'must' be changed," when those terms kick in, Xu Kunlin, deputy head of the NDRC's pricing department, said in a state radio interview. "The NDRC still wants to watch the market for a little bit longer."

There was speculation on industry Websites and among oil company officials late on Thursday that the government would raise fuel prices by nearly 10 percent effective yesterday. But the plan was cancelled for unknown reasons, according to consultancy CBI China. [My emphasis]

 

 

 

 

 

 

 

 

 

 

 

 

In the past, pump prices were strictly set by the state, and refiners lost money if rises in crude were not sufficiently reflected in changes at the pump.

The government implemented a new mechanism to better reflect market conditions in December last year when crude was low to ensure "reasonable" profit margins for refiners while not putting too high a burden on motorists.