Oil pricing to fight pollution

By refusing to cut domestic gasoline prices to reflect the recent fall of international crude oil prices, the National Development and Reform Commission, China's top economic planner, has attracted a storm of complaints from the public.

It is natural for Chinese drivers to envy their counterparts in the United States as pump prices in the US have fallen to below $2 per gallon, about half the price in China. Unfortunately, that kind of cheap gasoline is not what the country can environmentally afford.

Under the current mechanism that came into effect in March 2013, domestic prices of refined oil products are frequently adjusted to follow the pricing trend of international crude oil. But the severity of the thick smog that has engulfed many Chinese cities this month has forced the top economic planner to carefully weigh the benefits of sticking to the present oil pricing system against the environmental cost of encouraging more driving with cheaper gasoline.