CHINA has raised the price of gasoline and diesel by 5.5 percent and 5 percent respectively.
The increases, the second this year, had been expected after international crude prices surged to their highest level in two and half years following upheaval in Libya and other North African and Middle East nations.
The National Development and Reform Commission raised gasoline by 500 yuan (US$76.4) a ton, or about 5.5 percent, and diesel by 400 yuan a ton, or about 5 percent, effective from today.
It also raised the ex-factory price for jet fuel by 500 yuan a ton to 6,840 yuan, a move which will later translate to higher fuel surcharges for air travelers.
At Shanghai pumps, the ceiling retail price for 93-octane gasoline is now 7.79 yuan a liter, up from 7.39 yuan; the price for 97-octane gasoline rises to 8.29 yuan from 7.86 yuan; and zero-grade diesel is now 7.67 yuan from 7.33 yuan. Retail rates vary among regions.
The NDRC said international crude prices would remain high as the impact of the Libyan unrest won’t disappear in the short term and Japan’s post-quake reconstruction and the slowdown in nuclear plant development would trigger growing demand for petroleum.
The rises came a day after the central bank increased benchmark interest rates for the fourth time in less than six month to tame inflation.
The NDRC said the government was overdue a fuel price adjustment and it could have raised prices by a much larger margin. Under a pricing mechanism introduced in late 2008, it can adjust fuel prices when a basket of Brent, Dubai and Cinta crude oil prices changes more than 4 percent over 22 working days.
According to the Shanghai-based C1 Energy, the 22-day moving average had gained over 14 percent by yesterday since China’s last fuel price rise on February 20.
“In terms of timing, the price hike was delayed after the Qingming Festival holiday for the sake of the majority’s short-term interests,” said analyst Zhu Chunkai at Chem99.
The government raised fuel rates also because it was worried about a supply shortage as refiners would reduce output under narrowing refining margins.