To raise oil prices or not, that is the question

Diesel sold out. This notice can be seen at many gas stations in the country. Diesel has been in short supply again in a number of provinces and regions over the past few weeks, with Guangdong, Guizhou and Yunnan being the worst hit.

Han Xiao, who works for a private firm, drove from Beijing to Guangdong with his friends recently. He looked tired and upset after having had to wait for what seemed like ages at gas stations on his way to Guangdong. The experience made the journey in his Audi A6 TDI more like a burden, he says. "It seemed our journey could end anywhere on the way. We came across many gas stations that didn't have any gas."

The government is in a dilemma because surging oil prices in the international market means it has to raise diesel and gas prices so that refineries continue to maintain their production levels. But any increase in prices is likely to jeopardize its efforts to curb the rising consumer price index (CPI), which was 8.5 percent in April.