BEIJING, January 13 -- China has decided to cut the price of gasoline by 220
yuan (about 28 U.S. dollars) per ton as of January 14, the National Development
and Reform Commission (NDRC) announced Saturday.
The factory price
of kerosene for aviation will also drop by 90 yuan, the NDRC said in a circular
released Saturday night.
A gas station
worker adjusts price board in Beijing on January 14,
2006 after China decide to lower down refined oil prices.
The national development planner asked the two oil suppliers, China National
Petroleum Corporation and China Petroleum and Chemical Corporation (Sinopec) to
lower prices under the decision and guarantee supply of processed oil to meet
This is the second time in recent five years for China to lower the prices of
refined oil. The last price cut was in May 2005 when international price
China has raised the price for refined oil products 12 times since 2003,
including twice in 2006.
The international crude oil price has been declining since last September
after the price hit record high of over 77 U.S. dollars per barrel in last July.
New York Mercantile Exchange (NYMEX) prices for February delivery of light,
sweet crude oil stood at 51.88 U.S. dollars per barrel on Thursday,the lowest
since May 2005.
The decline of international price has prompted complaints of domestic
refined oil consumers, who have been calling for price cuts, as well as
proposals of experts who are expecting the launch of a pricing mechanism linking
domestic refined oil prices more closely to its international counterparts.
As the domestic price regulator, however, the NDRC has kept refined oil
prices relatively low compared with the international level, even when the
prices on the international market were soaring.
The Chinese government has endeavored to map out a pricing system for refined
oil in line with China's own conditions. However, the fluctuation of
international oil price, which usually sees jump rather than decline, leaves
little room for the government.
In March of 2006, China launched a preliminary move to lift refined oil
prices, while setting up a mechanism to offer subsidies to disadvantaged
communities and public service sectors and collect special fees from oil
producers who sell domestically produced crude oil.
Experts said cutting domestic refined oil prices may offer opportunities to
levy fuel oil tax, which was first proposed in 1994 and has been delayed for
concerns that it would impose a burden on those who consumed more oil, such as
bus and taxi drivers.