China cuts fuel prices earlier than expected
www.chinaview.cn 2008-12-19 02:25:17   Print

Two staff members change the price tag at a gas station in Beijing, Dec. 19. The country slashed the benchmark prices for fuel from 6.37 yuan (0.93 U.S. dollar) per litre to 5.46 yuan starting Friday morning. (Xinhua Photo)
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    BEIJING, Dec. 19 (Xinhua) -- Taxi driver Qu waited patiently in the December night chill as a gas station boy changed the price tag, which indicated China's unified fuel price cut effective early Friday morning.

    The country slashed the benchmark prices for fuel from 6.37 yuan (0.93 U.S. dollar) per litre to 5.46 yuan starting Friday morning, which was earlier than the long-awaited government scheme on fuel taxation and pricing slated for Jan. 1 next year.

    "The price cut of 0.91 yuan per litre means a monthly saving of900 yuan for a taxi driver," said Qu, waiting in Thursday's midnight dark for the clock to turn zero.

    The government distributed the news of the price cut via all major media and short messages to cell phone users on Thursday evening.

A taxi driver refuels his car at a gas station in Shanghai, east China, Dec. 19, 2008.

A taxi driver refuels his car at a gas station in Shanghai, east China, Dec. 19, 2008.  (Xinhua Photo)
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    Nevertheless, there was no queuing-up at the gas station in the early morning hour. The station boy said long queues appeared in previous price rises this year.

    The National Development and Reform Commission (NDRC) made it clear Thursday that domestic fuel prices would remain unchanged on Jan. 1, 2009, when the fuel tax is expected to kick in.

    This round of price cut was China's revamp of its oil pricing system to let it pegged with the global market.

    "The pricing would reflect the global market supply of oil resources and let the market play a fundamental role," said Zhao Jiarong, an official with the NDRC.

    "The latest cut would narrow the gap between wholesale and retail prices. Consumers would benefit from it," said Xu Kunlin, another NDRC official.

A worker changes oil prices at a gas station in Qingdao, a coastal city in east China's Shandong Province, Dec. 19, 2008.

A worker changes oil prices at a gas station in Qingdao, a coastal city in east China's Shandong Province, Dec. 19, 2008. (Xinhua Photo)
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    Zhou Dadi, an energy researcher, said his calculation showed the factory gate fuel price would drop by 2,000 yuan per tonne and the pre-tax retail price would be down by 1.7 yuan per liter after the price cut.

    A fuel trader said there might be a hoard purchase before the fuel taxation effective on Jan. 1 next year.

    Bai Chongen, an economist from Tsinghua University, said the post-tax retail price would remain unchanged next year as fuel producers would lower the factory gate price again to offset the tax.

    But for fuel producers, the price cut reduced their sales profit. "It will have a short-term impact on our profit, but we expect the global prices to rise in future. This will secure the long-term profit," said Shu Zhaoxia, a researcher with Sinopec, Asia's largest refiner.

    Experts said the country's first fuel price cut in almost two years would help revitalize companies and factories eking out in a slowed-down economy.

    Among industry beneficiaries, the aviation sector would see an immediate effect because the benchmark prices for jet fuel was slashed by a bigger margin of more than 30 percent, or 2,400 yuan, to 5,050 yuan per tonne.

    An Air China spokesman said the cut would definitely boost the aviation industry as the drop was beyond airliners' expectation.

    A Guojin Securities analyst said based on the forecast 2009 jet fuel consumption of 11.47 million tonnes, the price cut would lead to a cost reduction of 27.5 billion yuan for the country's aviation industry.



Oil drops to $36 as demand concern outweighs OPEC cut

    NEW YORK, Dec. 18 (Xinhua) -- Crude oil tumbled more than 9 percent Thursday as OPEC's record output cut failed to ease growing demand concerns brought by deepening economic recession.

    Light, sweet crude for January delivery shed 3.84 U.S. dollars to settle at 36.22 dollars a barrel on the New York Mercantile Exchange. Price dropped to 35.98 dollars a barrel, the lowest level last seen in June 2004. Full story

OPEC makes deepest-ever cut to shore up prices, but no quick fix

    ORAN, Algeria, Dec. 17 (Xinhua) -- OPEC on Wednesday agreed on a deepest-ever net cut of 2.2 million barrels per day (bpd) as of Jan. 1, bringing the total output cut in 2008 to 4.2 million bpd, in another attempt to bolster sagging oil prices under the global economic slowdown.

    Yet analysts say it still costs the Organization of Petroleum Exporting Countries (OPEC) several months and even further cuts to harvest at the level it is craving for, ruling out the possibility of a quick fix in the volatile market. Full story

OPEC extraordinary meeting opens amid output cut expectation

    ORAN, Algeria, Dec. 17 (Xinhua) -- The Organization of Petroleum Exporting Countries (OPEC) convened the 151st extraordinary ministerial meeting here Wednesday in expectation of an output cut decision to shore up the plunging oil prices.

    Ministers from the 13-member oil cartel gathered in northwestern Algerian coastal city of Oran, exploring an agreement to address the slide of oil prices, which have shrunk more than two thirds from record mid-July highs above 147 U.S. dollars in the face of a global economic downturn. Full story

China approves scheme on fuel taxation, pricing

    BEIJING, Dec. 18 (Xinhua) -- China has approved a long-awaited scheme on fuel taxation and reform of the country's refined oil pricing mechanism, the country's economic planner said Thursday.

    The State Council had decided to put the scheme into effect on Jan. 1, 2009, said the National Development and Reform Commission. Full story

China explains more on proposed reform of fuel tax, pricing

    BEIJING, Dec. 6 (Xinhua) -- China on Saturday gave further explanation on the proposed reform of fuel tax and pricing in a bid to dispel misunderstanding that a higher consumption tax will mean higher pump prices.

    The authorities on Friday released a draft reform plan to solicit public opinions till Dec. 12. It had been long advocated by experts as key for energy saving and economic structure transform. Full story

Editor: Yan
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