News / Asia

China Oil Price Overhaul is More Market Driven

A price board with arrows indicating falling fuel prices is seen as an employee fills the tank of a car at a PetroChina gas station in Hangzhou, Zhejiang province, China, March 26, 2013.A price board with arrows indicating falling fuel prices is seen as an employee fills the tank of a car at a PetroChina gas station in Hangzhou, Zhejiang province, China, March 26, 2013.
x
A price board with arrows indicating falling fuel prices is seen as an employee fills the tank of a car at a PetroChina gas station in Hangzhou, Zhejiang province, China, March 26, 2013.
A price board with arrows indicating falling fuel prices is seen as an employee fills the tank of a car at a PetroChina gas station in Hangzhou, Zhejiang province, China, March 26, 2013.
Reuters
China will start a more flexible system for pricing domestic fuel from Wednesday - the first major revamp in four years - to help avoid shortages and tame consumption.

The new scheme should reverse years of losses for China's oil refiners, analysts said, by increasing the link with world crude prices and scrapping a rigid formula for altering prices for oil products, such as gasoline and diesel.

"This is a big milestone for the energy industry and big win for the refiners as the new scheme should lead to more market-driven prices, which will lead to improved profitability in the sector,'' said Gordon Kwan, head of energy research at Mirae Aseet Securities in Hong Kong.

State oil companies like Sinopec Corp and PetroChina have suffered losses at their refining segments as domestic fuel prices often lagged the gains in costs of crude oil.

Refiners get lift

Top refiner Sinopec should benefit most from the reform, and should see the operating margin for its refining improve to 10-12 yuan ($1.6-$1.9) per barrel from 7 yuan in 2012, according to a Bernstein Research note.

The government also wants to use the more market-linked scheme to curb wasteful fuel consumption, as China, the world's second-largest oil user, is set to double its fuel use by 2030.

"After the adjustments the mechanism has taken a further step towards market liberalization, and will more flexibly reflect changes in the international market and help guarantee domestic market supplies," China's top economic planner, the National Development & Planning Commission, said on its website.

Under the new scheme, prices will be changed every 10 working days versus the previous window of 22, it added. Also, it will scrap an automatic change to fuel prices if crude prices move more than 4 percent.

Crude oil

The basket of reference crude oils also would be altered, the agency said, without elaborating.

The commission, however, gave scenarios under which the government may withhold or delay price adjustments - such as high domestic inflation or spikes in global oil prices over a short time frame. Additionally, prices will not be changed if the resulting fuel price moves are less than 50 yuan per ton.

Farmers, public transport, taxis and other vulnerable users would continue to receive subsidies to cope with big price increases.

China will cut its retail ceiling for prices of diesel and gasoline. Gasoline prices will be cut by 310 yuan [$49.91] per ton, while diesel prices will fall by 300 yuan per ton, or about 3.2 percent and 3.4 percent, respectively, from the last price change on February 25.

You May Like

Lebanese Media Unite to Support Palestinians in Gaza

Joint newscast billed as Arab world’s first unified news bulletin in support of Hamas-controlled Gaza Strip More

Photogallery Australian PM Alleges ‘Coverup’ at MH17 Crash Site

Meanwhile, Russia's ambassador to Malaysia denies plane's black boxes were opened before they were handed over to Malaysian officials More

Despite Advances in AIDS Treatment, Stigma Lingers

Leading immunologist tells VOA that stigma is often what prevents those infected with disease from seeking treatment More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
IAEA: Iran Turns its Enriched Uranium Into Less Harmful Formi
X
July 22, 2014 10:26 AM
Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

AppleAndroid