Zhen Yi, a taxi driver for Xinyue United in Beijing, kept
complaining as he was driving.
"Life is becoming tougher," grumbled the 30-year-old, who
recently became a father. "You cannot get a single passenger even
at rush hour."
Zhen said he works 12 hours a day: 8 hours to earn money to pay
administration fees to the company and gasoline costs, and the
remaining 4 to make ends meet.
"If the oil price keeps rising, I will have to work even
longer," said Zhen.
But Zhen can rest assured that another round of price hikes on
the international market will not affect him, at least for the time
On Sunday, the National Development and Reform Commission (NDRC)
ruled out raising retail prices for gasoline and diesel oil in the
near future, despite soaring crude oil prices on international
markets in recent weeks.
The NDRC said oil product supply and demand are generally
balanced, although some gas stations have been raising prices
To ensure supply, the NDRC has urged oil companies to process
and import more oil products. Transportation agencies have also
been instructed to deploy adequate carrying capacity and ensure
timely delivery of adequate oil supplies.
The NDRC fixes the price of oil products sold domestically on
the basis of the weighted average of futures exchanges in
Singapore, Rotterdam and New York.
Oil product prices in China have risen just 15 percent this
year, while international oil prices have jumped more than 60
percent in the same period.
Observers say dealers have been hoarding oil products,
speculating that the NDRC would soon raise the prices to reflect
the international spike and reduce the losses of refineries.
Stretched supplies have led to gas stations running their tanks dry
in the east and south and some raising prices illegally.
The NDRC's rare announcement, however, indicates that the
central government believes that hiking oil prices would fan
inflation and undermine efforts to cool the economy.
The commission also said it would immediately initiate a
nationwide inspection to clamp down on those who are stockpiling
products or illegally raising prices.
But the government's decision to postpone raising retail prices
will make life even tougher for the refineries, which are already
saddled with losses because they have to buy crude oil at high
prices while downstream prices are frozen.
Last week, Sinopec, China's
largest refiner, announced that pretax profit in its refining
division fell 20 percent year-on-year to 1.5 billion yuan (US$178.9
million) in the third quarter.
Analysts say that the refining business could get even worse as
oil prices continue to rise.
To help the refineries cope, oil companies have raised
ex-factory prices for oil products, squeezing the profit margin for
China refined 190 million tons of crude in the first three
quarters of this year, up 15 percent from the same period of last
year. During that period, production of gasoline, kerosene and
diesel oil reached 120 million tons, a rise of 16.4 percent; and
the amount of imported finished oil products leapt 88.0 percent to
3.9 million tons.
China has overtaken Japan to become the world's second-biggest
oil consumer, following the United States.
(China Daily November 2, 2004)