Despite the fact that diesel has been in short supply in Guangzhou over the past few months, the local authorities have not yet decided to further raise prices.

Lan Lan, an official with the municipal pricing bureau in Guangzhou, said the issue was not yet on the agenda, although he admitted that the city was suffering from a shortage of supplies.

The latest price rise for diesel was in May, when the price rose by 11 percent to 4.64 yuan (57 US cents) from 4.18 yuan (51 US cents) per litre. The latter price was itself set in March.

The official said that the bad weather in South China was a main reason for the shortage of supplies.

The month-long heavy rain in May and three following typhoons made the transportation of oil difficult.

At the same time, demand for diesel has increased as many enterprises are using more to generate their own power owing to power outages.

Also, big vehicles, including buses and trucks, need more diesel to run their cooling systems in the burning summer months.

The official said the price of diesel could rise again this year.

Lan's viewpoint was backed by Yao Daming, a department director of the Guangdong Provincial Chamber of Commerce for Oil and Gas.

"A small rise in the price of diesel is very likely before the end of this year," he said.

The State authorities are determined to adjust oil prices to integrate them with international prices, he said.

He added local market demand was obviously outstripping supply.

(China Daily August 22, 2006)