Oil shares up on review of pricing rules
By Richard Fu |
November 5, 2011, Saturday
|
Print Edition
Print Edition
SHARES in Sinopec and PetroChina rose yesterday amid speculation the oil firms will be allowed conditionally to set fuel prices themselves.
This would be a major step forward in market-oriented pricing and bolster profits at the two top oil companies, which this year posted huge losses in their refining businesses as crude oil price increases outpaced government-set pump rates.
In Hong Kong, Sinopec jumped 8.3 percent to HK$7.92 (US$1.02), and Petro-China gained 3.7 percent to HK$10.02. In Shanghai, Sinopec rose 2.6 percent to 7.41 yuan (US$1.17), and PetroChina increased 1.5 percent to 10.11 yuan.
In a new pricing proposal under review by the authorities, oil firms can adjust prices themselves in line with a government-set pricing formula when crude oil fluctuates within a certain price range, the China Securities Journal reported yesterday.
Oil firms need to cut fuel prices immediately when falls in crude justify a reduction, but they can choose not to raise fuel prices or raise them by a smaller margin when crude price rises justify it, the report said.
Currently gasoline and diesel prices are set by the National Development and Reform Commission.
The commission in late 2008 introduced a pricing mechanism that indirectly links fuel prices to crude prices, but it also looks at other factors such as inflation when setting prices.
The top economic planning agency said last month that it was revamping the pricing system to allow a higher frequency of price adjustments and greater transparency.
This would be a major step forward in market-oriented pricing and bolster profits at the two top oil companies, which this year posted huge losses in their refining businesses as crude oil price increases outpaced government-set pump rates.
In Hong Kong, Sinopec jumped 8.3 percent to HK$7.92 (US$1.02), and Petro-China gained 3.7 percent to HK$10.02. In Shanghai, Sinopec rose 2.6 percent to 7.41 yuan (US$1.17), and PetroChina increased 1.5 percent to 10.11 yuan.
In a new pricing proposal under review by the authorities, oil firms can adjust prices themselves in line with a government-set pricing formula when crude oil fluctuates within a certain price range, the China Securities Journal reported yesterday.
Oil firms need to cut fuel prices immediately when falls in crude justify a reduction, but they can choose not to raise fuel prices or raise them by a smaller margin when crude price rises justify it, the report said.
Currently gasoline and diesel prices are set by the National Development and Reform Commission.
The commission in late 2008 introduced a pricing mechanism that indirectly links fuel prices to crude prices, but it also looks at other factors such as inflation when setting prices.
The top economic planning agency said last month that it was revamping the pricing system to allow a higher frequency of price adjustments and greater transparency.
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