Official says China's fuel prices will drop under new fuel-pricing system
9/12/2008 16:35
China's existing pump prices will go down a bit as the country begins
reform of fuel taxation and refined oil product pricing system, which is
expected to take place on Jan. 1 of 2009, an official said in Beijing
today.
Xu Kunlin, vice head of the pricing department at the National
Development and Reform Commission (NDRC), told reporters that there was room to
lower the country's current fuel prices.
Current pump prices in China, if
converted, were equivalent to a world crude oil price of US$83.5 a barrel, he
said.
"When the fuel taxation reform begins, we will adjust the fuel prices
based on the world oil price then," Xu said.
Yesterday, world crude oil
recovered from last week's losses and stood at above US$43 a barrel on the New
York Mercantile Exchange.
Currently, Chinese drivers are paying much more
than those in many other countries because domestic fuel prices have been
unchanged since June despite plunge of world crude oil prices. Government-set
prices are changed only infrequently.
Take gasoline 93, the most commonly
used type of fuels. The current price stands at 6.37 yuan (about US$0.93) per
liter in Beijing and 6.20 yuan in the other parts of the country.
It is
higher than in the United States. US Energy Department said the average weekly
retail price of gasoline fell to US$1.699 a gallon (equivalent to about 3.8
liters) as of yesterday, the lowest point since February 2004.
Last Friday,
the NDRC, along with three other government agencies, unveiled a draft plan on
fuel taxes and refined oil product pricing to solicit public opinion.
The
plan, scheduled to take effect on Jan. 1, will abolish six fees now charged for
road or waterway maintenance and management. At the same time, it will raise
gasoline taxes from 0.2 yuan per liter to 1 yuan and diesel taxes from 0.1 yuan
per liter to 0.8 yuan.
The fuel price system will also cover farm vehicles
and ships.
The draft plan said China's domestic crude oil prices should be
set directly in line with world prices, but the link should be controlled and
indirect for refined petroleum prices.
Under the reform scheme, "pricing of
domestic refined oil prices should not only reflect fluctuations of
international oil prices and production cost, but also take into account
domestic oil supply and demand," it said.
In the retail sector, the draft
said fuel would be sold at set ceiling prices, which would be based on producer
prices with some reference to world prices.
Currently, China allows retail
fuel prices to fluctuate around a state-set benchmark.
The government will
retain "an appropriate control" over the fuel price, according to the
draft.
China has been pushing for fuel tax reform for many years, and the
idea of a fuel tax was raised as long ago as 1994. Both government officials and
economists have said that the current global oil price plunge presents a window
of opportunity for this reform.
The world crude oil price has plunged almost
70 percent from a peak of US$147 per barrel in mid-July.
Xinhua
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