China’s top economic planner has just announced that it will raise the country’s retail price ceiling for gasoline and diesel beginning Monday. Fuel prices are being raised by 300 yuan per ton. Experts say it comes as crude oil prices have increased in the international market.
The National Development and Reform Commission announced Sunday night that it will hike UP China’s gasoline prices by 300 yuan per ton, and diesel prices by 290 yuan per ton.
China last adjusted fuel prices on November 16th when it cut gasoline and diesel prices by 310 yuan and 300 yuan per ton respectively, or around 3 percent.
Zhou Dadi, senior researcher at Energy Research Inst., NDRC, said, "I think the main reason for this round of fuel prices hike is because the international crude oil prices are increasing. And recently, it already achieved another highest level."
Data from C1 Energy shows that the 22-day moving average price of Brent, Dubai and Cinta, up to February 15th, was 4.3 percent above the level when China last adjusted fuel prices.
An increase or fall in crude benchmarks by more than 4 percent over a 22-working-day period typically triggers a price rise or cut under China’s current pricing mechanism.
Despite some analysts worried that this round of fuel price hike is to add more pressures to China’s heating-up inflationary pressures, Zhou says the impact of oil price hike on consumer goods prices is minor.
Zhou Dadi said, "The import price of oil has already increased. So it’s need to forward the pressure to the downstream industry. In terms of the inflation issue, if it’s really become serious again, it’s caused by the money, liquidity issues, it’s not cause by fuel price hike.
Experts also predict that the international crude oil prices are not likely to retreat back from current level, as a result of a wrestling between higher fuel demand and louder cries for environmental protection.
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