Chinese motorists have given the government's announcement of a
cut in fuel price a lukewarm response, complaining it is too
"The price cut is good news to me, but the price did not drop as
much as I had expected," said a taxi driver in Beijing, who
declined to give his name.
The government announced on Sunday that it would lower prices by
220 yuan (US$28) per ton. In Beijing, the market price of 93 octane
petrol immediately dropped from 5.09 yuan a liter to 4.90 yuan.
The taxi driver with the Beijing Xiaohai Taxi Company said his
taxi consumed 25 liters a day and a 0.19 yuan per liter price cut
would save less than 10 yuan every two days.
"Every time the price is lifted, it goes up by about 0.40 yuan
per liter, but when the price is cut, the decrease is less than
half of the increase," he complained.
As international oil prices have soared, the government has
raised petrol prices 12 times since 2003, including twice in
The last price cut was in May 2005.
Another taxi driver named Ji complained the international crude
oil price had dropped by 21.21 percent from US$66 to 52 per barrel,
while the domestic price of 93 octane petrol only dropped by a
slight 3.73 percent.
"The price cut is negligible in reducing the cost of driving,"
A survey by sina.com showed that about 90 percent of those
polled were not satisfied with the price cut because it was too
"Although international prices have dropped noticeably, we can
not simply expect that China should drop its prices immediately by
a big margin," said Cha Daojiong, head of the International Energy
Resources Strategy Research Center of the People's University of
Factors such as the cost of production, transportation and
refining should be taken into consideration in setting the price,
The government has endeavored to map out a pricing system for
refined oil that takes account of conditions in China, but
fluctuating international prices have made this difficult.
World crude oil prices have dropped since September. New York
Mercantile Exchange (NYMEX) prices for February delivery of light,
sweet crude stood at US$51.88 per barrel on Thursday, the lowest
price since May 2005.
Lower international prices have seen domestic consumers calling
for price cuts, and proposals from experts for a pricing mechanism
that will link domestic refined oil prices more closely with
However, the domestic price regulator, the National Development
and Reform Commission, has kept refined oil prices low compared
with international levels, even when prices on the international
"It's not an easy thing to raise the oil price, and it's not
easy to cut it either," said a source with the Beijing company of
the China Petroleum and Chemical Corporation (Sinopec).
"Our price is already lower than elsewhere in the world, if the
price is lowered further, we would sustain losses in business,"
said the source.
In December 2006, the domestic price of gasoline was 5,200
yuan(US$667) per ton and diesel 4,570 yuan per ton, while in
Singapore prices were 5,509 yuan and 5,352 yuan respectively, said
Jiang Jiemin, general manager of the China National Petroleum
Experts said that even if the international prices continued to
drop, there was little room for cuts in domestic prices as domestic
oil companies looked to sustaining their profits.
Nevertheless, the price cut was still applauded by some.
Mr. Cheng, from south China's Guangdong Province, had abandoned
driving his car due to constant oil price hikes.
With the lower price, Cheng said he planned to resume driving
Experts said cutting domestic refined oil prices may create the
opportunity to levy a fuel oil tax, which was first proposed in
1994 and has been delayed out of fear that it would impose too
heavy a burden on those who consume most, such as taxi drivers.
(Xinhua News Agency January 16, 2007)