China has decided to cut the price of gasoline by 220 yuan
(about US$28) per ton as of Jan.14, the National Development and
Reform Commission (NDRC) announced in Beijing on Saturday.
The factory price of kerosene for aviation will also drop by 90
yuan, the NDRC said in a circular released Saturday night.
The national development planner asked the two oil suppliers,
China National Petroleum Corporation and China Petroleum and
Chemical Corporation (Sinopec) to lower prices under the decision
and guarantee supply of processed oil to meet market demands.
This is the second time in recent five years for China to lower
the prices of refined oil. The last price cut was in May 2005 when
international price declined.
China has raised the price for refined oil products 12 times
since 2003, including twice in 2006.
The international crude oil price has been declining since last
September after the price hit record high of over US$77 per barrel
in last July.
New York Mercantile Exchange (NYMEX) prices for February
delivery of light, sweet crude oil stood at US$51.88 per barrel on
Thursday, the lowest since May 2005.
The decline of international price has prompted complaints of
domestic refined oil consumers, who have been calling for price
cuts, as well as proposals of experts who are expecting the launch
of a pricing mechanism linking domestic refined oil prices more
closely to its international counterparts.
As the domestic price regulator, however, the NDRC has kept
refined oil prices relatively low compared with the international
level, even when the prices on the international market were
The Chinese government has endeavored to map out a pricing
system for refined oil in line with China's own conditions.
However, the fluctuation of international oil price, which usually
sees jump rather than decline, leaves little room for the
In March of 2006, China launched a preliminary move to lift
refined oil prices, while setting up a mechanism to offer subsidies
to disadvantaged communities and public service sectors and collect
special fees from oil producers who sell domestically produced
Experts said cutting domestic refined oil prices may offer
opportunities to levy fuel oil tax, which was first proposed in
1994 and has been delayed for concerns that it would impose a
burden on those who consumed more oil, such as bus and taxi
(Xinhua News Agency January 14, 2007)