Lower prices at the pumps after cost of crude oil falls
By Feng Jianmin |
November 16, 2012, Friday
|
Print Edition
Print Edition
MOTORISTS will pay less at the pumps from today after fuel prices have been cut by more than 3 percent, the first cut since July, in response to lower international crude oil prices.
Gasoline drops by 310 yuan (US$49.69) a ton and diesel by 300 yuan a ton, effective from today, the National Development and Reform Commission, which sets energy prices in China, said yesterday. That represents average cuts of 3.2 percent and 3.4 percent respectively.
In Shanghai, the ceiling retail price for 93-octane gasoline is now 7.75 yuan per liter, down from 8 yuan, 97-octane gasoline falls to 8.24 yuan from 8.51 yuan and zero-grade diesel is now 7.66 yuan, down from 7.92 yuan, the local price authority said.
Fuel prices vary from province to province.
Under the NDRC's pricing mechanism, fuel prices can be adjusted when the 22-day moving average of a basket of international crude changes more than 4 percent from the previous adjustment, though it also looks at other factors, such as inflation.
The basket of crude fell 4.36 percent as of Wednesday since China last adjusted prices on September 11, according to consultancy C1 Energy, due to worries over the "fiscal cliff" in the US - the combination of expiring tax cuts and across-the-board government spending cuts due on December 31 - as well as weak demand from major economies including China and Japan.
The September price adjustment raised gasoline prices by 550 yuan per ton and diesel by 540 yuan.
"I heard days ago that the NDRC may cut gas prices really soon, so I filled up only half the tank during each refuel," a Shanghai taxi driver surnamed Zhang said yesterday. "I'm almost running out of oil and the announcement is finally there."
However, other drivers complained that the authority always seemed to raise prices more eagerly and substantially than it cut prices.
Liao Kaishun, an analyst at C1 Energy, said the NDRC had delayed the price cut for a day after international oil price changes reached 4 percent, and may introduce a more flexible oil pricing mechanism when the international oil price reached its bottom and if inflation remained cool by then.
"The NDRC is mulling over a change of the pricing mechanism," Liao said. "It may reduce the shortest price change interval from 22 days to 10 days, and halve minimal price changes from 4 to 2 percent to better follow international oil price trends."
Domestic gasoline prices may rise more frequently after the mechanism is introduced, he added.
The NDRC has rigidly followed the pricing formula in previous adjustments. The September increase followed a rise in August and three cuts between May and July amid tepid growth in oil demand as the overall economy slowed.
Commission officials have said on several occasions that they are working to improve the frequency of fuel adjustments as part of efforts to make the current pricing system more transparent and predictable.
Commodity analysts said a bearish look still dominates the oil market after the International Energy Agency re-emphasized over-supply in its outlook report released earlier this week.
Gasoline drops by 310 yuan (US$49.69) a ton and diesel by 300 yuan a ton, effective from today, the National Development and Reform Commission, which sets energy prices in China, said yesterday. That represents average cuts of 3.2 percent and 3.4 percent respectively.
In Shanghai, the ceiling retail price for 93-octane gasoline is now 7.75 yuan per liter, down from 8 yuan, 97-octane gasoline falls to 8.24 yuan from 8.51 yuan and zero-grade diesel is now 7.66 yuan, down from 7.92 yuan, the local price authority said.
Fuel prices vary from province to province.
Under the NDRC's pricing mechanism, fuel prices can be adjusted when the 22-day moving average of a basket of international crude changes more than 4 percent from the previous adjustment, though it also looks at other factors, such as inflation.
The basket of crude fell 4.36 percent as of Wednesday since China last adjusted prices on September 11, according to consultancy C1 Energy, due to worries over the "fiscal cliff" in the US - the combination of expiring tax cuts and across-the-board government spending cuts due on December 31 - as well as weak demand from major economies including China and Japan.
The September price adjustment raised gasoline prices by 550 yuan per ton and diesel by 540 yuan.
"I heard days ago that the NDRC may cut gas prices really soon, so I filled up only half the tank during each refuel," a Shanghai taxi driver surnamed Zhang said yesterday. "I'm almost running out of oil and the announcement is finally there."
However, other drivers complained that the authority always seemed to raise prices more eagerly and substantially than it cut prices.
Liao Kaishun, an analyst at C1 Energy, said the NDRC had delayed the price cut for a day after international oil price changes reached 4 percent, and may introduce a more flexible oil pricing mechanism when the international oil price reached its bottom and if inflation remained cool by then.
"The NDRC is mulling over a change of the pricing mechanism," Liao said. "It may reduce the shortest price change interval from 22 days to 10 days, and halve minimal price changes from 4 to 2 percent to better follow international oil price trends."
Domestic gasoline prices may rise more frequently after the mechanism is introduced, he added.
The NDRC has rigidly followed the pricing formula in previous adjustments. The September increase followed a rise in August and three cuts between May and July amid tepid growth in oil demand as the overall economy slowed.
Commission officials have said on several occasions that they are working to improve the frequency of fuel adjustments as part of efforts to make the current pricing system more transparent and predictable.
Commodity analysts said a bearish look still dominates the oil market after the International Energy Agency re-emphasized over-supply in its outlook report released earlier this week.
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