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Thursday, May 25, 2006

China raises its oil price

Written by: S.M.Mehdi Hassan
China has raised its oil price due to the raise of oil price in the world market. This is the second time in the last two months that China has raised its oil price. According to the report published in Bloomberg.com Chinese government raised the price of gasoline by 10.6 percent, diesel by 12.3 percent and jet fuel by 10.3 percent. However, the price of oil in China is far below than other countries; 4.20 yuan or 52 U.S. cents and 42 euro cents per liter, or about US$2.10 a gallon. China after USA and Japan in the world is the third largest oil consumer. Until 1990 China depended on oil raised from its domestic wells. The demand of oil increased followed by its economic boom especially, in the manufacturing sector. China’s official Xinhua News Agency said that China’s main planning agency, State Development and Reform Commission, had imposed the hike because the present price of oil in China is far below than that of the International market. For this reason, Chinese oil refinery can not make much profit by selling refined oil. The raise was necessary in order to keep the flow of the oil supply. The Commission asked local governments to adopt subsidy policies after this rise and take necessary steps to protect the taxi drivers. It also asked the two National oil suppliers China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec) to keep supplying oil as per the demand. This is the second major price adjustment in China since 2003.

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