China, Asia’s biggest oil consumer, will raise retail gasoline and diesel prices today after global crude costs increased, according to the National Development and Reform Commission.
The ceiling for gasoline prices will rise by 500 yuan ($76.40) a metric ton and for diesel prices by 400 yuan, the nation’s top planning agency said in a statement on its website yesterday. The cost of No. 3 jet fuel will rise by 500 yuan a ton to 6,840 yuan, it said in a separate statement.
China last raised fuel prices by as much as 4.6 percent on Feb. 20 based on a mechanism introduced in December 2008 that allows changes when crude costs change more than 4 percent over 22 working days. Oil in New York has advanced 29 percent since Feb. 15, when unrest in North Africa and the Middle East spread to Libya, formerly Africa’s third-biggest oil producer.
The move is a “normalization” as “the government does want to give more appropriate price signals,” Katherine Spector, commodities strategist with CIBC World Markets Corp., said in a phone interview from New York. “Subsidies obscure price signals, so if you want consumers to make rational decisions, it’s harder to do when subsidies are in place. They’ve been gradually moving in that direction.”
The benchmark retail price of gasoline will increase by 0.37 yuan a liter, and that of diesel by 0.34 yuan, China’s official Xinhua News Agency said, citing the NDRC.
Higher Costs
Higher gasoline and diesel prices will add to costs for manufacturers and farmers. Consumer prices rose at an annual 4.9 percent pace in February, more than the government target of 4 percent for 2011. China’s central bank raised interest rates in April 5 for the fourth time in less than six months to curb inflation.
China will continue subsidizing industries including farming, fishing and public transport, the NDRC said.
“The global crude oil prices may remain high during the following period,” the commission said.
“Properly adjusting fuel prices will help curb excessive use of oil and contribute to energy saving.”
China Petroleum & Chemical Corp. and PetroChina Co. are the nation’s largest oil refiners.
