BIZCHINA> Center
|
BIZCHINA> Center
|
|
Related
Oil's not well
By Wan Zhihong (China Daily)
Updated: 2008-06-16 10:52 Li Jianguo, a taxi driver in Beijing, is worried about the high crude oil price in the international market. "It has been hovering around $130 per barrel. There are rumors the government will raise the gasoline price soon. If that happens, I'll have to shell out a lot more to buy fuel," Li says. The retail price for 93-octane gasoline that fuels most of Beijing's taxis and private cars sells for 5.3 yuan per liter, while in the US the price stands at around $1.1.
While crude oil price in China is linked to the international market, prices for refined oil products such as gasoline and diesel are still controlled by the government. Because of soaring crude prices, the government has raised refined oil prices seven times since 2005. The latest price rise was effected in November 2007, when the prices of gasoline, diesel and aviation kerosene were raised by 500 yuan, or 9 percent, a ton. The global crude price was then around $90 per barrel. Crude has now crossed $130 per barrel, at times flirting with the $140 mark. A report by US investment bank Morgan Stanley predicts it may reach $150 in July. Soaring crude prices means China has to pay much more for its oil imports. Last year the country imported 163 million tons of crude, around 47 percent of the total consumption. The gap between the high crude oil price abroad and the relatively low price of refined oil products at home is bleeding the oil refiners dry. In the first quarter of this year, the country's largest refiner, Sinopec, saw a loss of over 20 billion yuan in its refining business. The country's largest oil company, PetroChina, also saw over 30 percent decrease in its net profit in the first three months, with refining losses an important factor for the drop in earnings. Small oil refineries are hit even worse by the high crude prices. As they can't keep up with such rapid increase in raw material costs, many of them have cut down or even halted production. As overall production started dropping from the fourth quarter of last year, some parts in eastern and southern China have been experiencing shortages in refined oil products such as diesel. In some provinces like Guangdong, it's now hard to get diesel at many filling stations. To ensure smooth supply, China has ordered PetroChina and Sinopec to boost oil processing. The two have said they have increased refined oil imports and stopped exporting to increase market supply. (For more biz stories, please visit Industries)
|
