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Fuel Shortages Disrupt China

Parts of China, particularly in the South, have been experiencing serious fuel shortages in recent days as international crude oil prices reach record highs. Government gasoline price controls are a major cause of the problem.

Long lines of vehicles at gasoline stations have become a familiar sight in recent days in the major cities of Guangdong Province, China's manufacturing hub.

Earlier this month, gasoline and diesel rationing was imposed in the provincial capital of Guangzhou. Fuel shortages have also been reported in the city of Shanghai and Yunnan Province.

Reports say state-owned Chinese refiners are balking at increasing the supply, in a bid to put pressure on the government to lift its price controls on fuel.

The refiners want to pass on the rising cost of crude oil, which has passed $60 a barrel. But the government is keeping the retail price of gasoline at around 44 cents a liter, and therefore the price it pays the refiners is also kept low.

Elspeth Thomson of the National University of Singapore is an expert on energy and transportation issues in China. She says Beijing's attempt to control inflation is at fault.

"The gap between the international price and local price in China has been very wide," said Elspeth Thomson. "The government sought to cushion inflation from galloping ahead. That is its greatest concern. So refiners in China have been buying crude oil at very, very high prices and absorbing the cost of this because they haven't been able to push the cost down to consumers."

On Thursday, the state-owned newspaper China Daily called for retail prices to rise, to restore the balance of supply and demand. The editorial said failing to address the problem now would only hurt the economy later.

But raising retail prices is a delicate issue. Ms. Thomson says China would have to do it gradually so as not to anger consumers.

The fuel shortage comes as China's roaring economy creates an ever-heavier demand for energy. There are more and more vehicles on the streets, exports are booming, and factories and heavy industries crucial to the Chinese economy consume huge amounts of power.