Related: China lifts fuel prices again

    BEIJING, May 24 -- Shanghai motorists will pay nearly 10 percent more at the pump starting today in response to China's second increase in gasoline and diesel prices this year.

    No. 90 unleaded gas, a low-octane fuel popular among cabbies, rose to 4.52 yuan (56 US cents) a liter from 4.13 yuan, according to a statement issued yesterday by the Shanghai Price Bureau. Zero-grade diesel increased to 4.62 yuan from 4.16 yuan.

    The authority also gave gas stations approval to raise the price of liquefied petroleum gas used by cabbies to 3.3 yuan a liter from 3.1 yuan.

    Today's local price increase follows authorization from the National Development and Reform Commission.

    The last time pump prices jumped in Shanghai was in March. No. 90 rose to 4.13 yuan a liter from 3.93 yuan, and zero-grade diesel went to 4.16 yuan a liter from 4.03 yuan. The price of liquefied petroleum gas also rose to 3.1 yuan a liter from 2.97 yuan.

    In China, retail fuel prices are set by the government, which keeps them in check to protect low-income citizens.

    Refiners, however, have to pay world prices for crude oil, and those rates have soared.

    Major cities such as Shanghai and Beijing allowed cab companies to raise rates in response to the March pump price hike.

    In Shanghai, the minimum fare, which covers the first 3 kilometers, increased this month by 1 yuan to 11 yuan. The fare for additional distances went up to 2.1 yuan per kilometer, 0.1 yuan higher than the previous rate.

    Those adjustments were the result of a new mechanism that allows taxi fares to float with fuel prices. Public hearings are no longer needed for each increase, but fares can go up only once a year.

    As a result, today's gas price runup won't affect commuters, but it will take a toll on cabbies' earnings.

    It will help improve profits at refiners, but the rate of the retail increase still lags the rise in crude.

    "Since January 2003, China's benchmark 90-octane retail gasoline guide price has risen by 56 percent, and its diesel fuel price has risen by 50 percent. International crude prices have doubled since then," wrote Gordon Kwan, head of China oil and gas research at CLSA Ltd, in a research note yesterday.

    The Chinese government has said it is studying a new pricing mechanism to aid domestic refiners whose margins have been eroded by the price squeeze.

    Top Asian refiner China Petroleum & Chemical Corp, which imports about 80 percent of the crude it needs, posted an operating loss of 7.88 billion yuan at its refining division in the first quarter after reporting a profit of 1.67 billion yuan a year earlier.

    (Source: Shanghai Daily)