BEIJING, Jan. 14 (Xinhua) -- China said it would cut
benchmark retail prices of gasoline by 2 percent and diesel by 3.2 percent as of
midnight Wednesday, in a rare move to cut prices twice in a month.
Prices were last cut on Dec. 19. At that time,
benchmark gasoline and diesel prices were lowered by 14 percent and 18 percent,
respectively.
The benchmark gasoline price will be reduced by 140
yuan (30 U.S. dollars) per tonne, while that for diesel will be slashed by 160
yuan per tonne, said the National Development and Reform Commission (NDRC).
Xu Kuning, deputy director of the pricing department
of NDRC, said the latest cuts were made to reflect declines in global crude
prices.
"There is still room for a further cut in domestic
oil prices despite recent fluctuations in global prices," Xu said.
Prices are down more than 70 percent from a mid-July
peak of 147 U.S. dollars a barrel and are continuing to fall overall despite a
short-lived recovery following tension in the Middle East and disputes over
natural gas between Russia and Ukraine.
Crude prices settled at 37.78 U.S. dollars a barrel
Tuesday on the New York Mercantile Exchange. The price was about 40 U.S. dollars
a barrel when China last cut domestic prices in December.
The more frequent cuts in fuel prices also came amid
a series of government measures to bolster the economy, which expanded 9 percent
in the third quarter, the slowest pace in five years.
NDRC's Xu said lower prices would alleviate burdens
on oil consumers, individuals and enterprises alike, and would also have a
"positive effect" on the growth of the auto industry.
China also approved Wednesday a set of tax cuts and
subsidies for the auto industry to boost auto purchases and pledged more support
for the steel sector, the latest move to stimulate the slowing economy.
Zhou Dadi, a researcher with the Energy Research
Institute of NDRC, said the latest cuts would drive pump prices down by more
than 0.1 yuan, according to his calculation.
Qian Zhaoming, a taxi driver in Nanjing, said he
would be able to save one to two hundred yuan a month after the cut, although
the margin of the cut was not very big.
Government-set fuel prices are traditionally changed
infrequently. As a result, Chinese drivers were paying much more than those in
many other countries before the cut last month.
"The second cut will have an obvious impact on
corporate earnings," said an unidentified official of China Petroleum and
Chemical Corporation.
"But the new pricing mechanism will benefit the
refining sector in the long run," said the official of Asia's largest refiner.
Zhou, the NDRC researcher, described the latest cuts
as "a good sign."
"It means that domestic oil prices will react more
quickly to changes on the global markets in the future," he said.
The latest cuts were also the first since the new
pricing mechanism for refined oil products took effect on Jan. 1, 2009.
Previously, China's refiners had suffered huge losses
because of a gap between government-set domestic retail prices and global crude
prices when global prices soared.
Under the new pricing mechanism, China's domestic
prices are "indirectly linked" to global crude prices "in a controlled manner".
NDRC's Xu said the "indirect link" would be based
upon the average global crude prices, while also taking into account domestic
production costs, taxation, and "appropriate profits" of oil producers.
Xu explained that the country would move to adjust domestic prices when changes in prices of relevant oil products on the global market "within a certain period" went beyond "a certain level".
Gas, diesel to cost less; more price cuts likely
BEIJING, Jan. 15 -- Gasoline and diesel will be cheaper from Thursday, and the country's top economic planner could cut retail fuel prices more frequently to take them closer to global market levels.
The National Development and Reform Commission (NDRC) Wednesday announced cuts in gasoline and diesel prices by 140 yuan (20.5 U.S. dollars) and 160 yuan a ton, or by 2 and 3.2 percent, respectively. Full story
