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

African States Push to Keep Boko Haram Offline

Central African telecoms ministers working with Nigeria to block all videos posted by Boko Haram in effort to blunt Nigerian militant group's propaganda More

Falling Oil Prices, Internet-Savvy Youth Pose Challenge for Gulf Monarchies

Across the Gulf, younger generations are putting a strain on traditional politics More

Philippines Call Center Workers Face Challenges

Country has world’s largest business process outsourcing, or BPO, industry, employing some one-million workers 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.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More