NDRC Announces Price Decreases for Petroleum and Diesel Fuel in China

The National Development and Reform Commission announced that per ton prices for petroleum and diesel fuel will decrease by 420 yuan ($66.33) and 400 yuan ($63.18), respectively, CNR reported today. As a result, average national prices of 90 grade gasoline and zero grade diesel have dropped 0.31 yuan ($0.048) and 0.34 yuan ($0.054) per liter. Average per liter prices of the two gasoline types are now at 6.45 yuan ($1.019) and 6.76 yuan ($1.068). In Beijing specifically, the per liter price of 92 grade gasoline has dropped from 7.64 yuan ($1.207) to 7.31 yuan ($1.155).

The NDRC has received several enquires regarding the fluctuating price of petroleum in the recent past. In response to complaints that the price of fuel rises considerably at each juncture, Zhou Wangjun, deputy directory of the NDRC's Pricing Department, said that the government is working on shortening the sample duration of time used to set prices adjustments. The NDRC currently uses a 22 working day base to measure new changes, which leads to sharp increases in price. There was even one day where fuel prices increased a full nine percent.

When asked about the price of fuel in China compared to other countries, the NDRC admitted that, although fuel is cheaper in the country than in Japan, South Korea and certain European nations, it is indeed more expensive than it is in the US. Furthermore, the NDRC acknowledges that the bulk of the discrepancy between Chinese and American fuel prices is due to the increased taxes in the country, with a portion of those funds going to the government. China University of Petroleum Professor Wang Zhen points out that the US government charges a tax of around 23 percent of on fuel there, while the Chinese government charges between 28 percent and 30 percent.

There are those who point out that around half of Chinese fuel is domestically drilled and refined, which implies that import costs should be lower when compared with other countries. They are doubts as to where those profit margins go to. Mr. Zhou replied that only a portion of the profits collected go to China's three primary petroleum enterprises (CNPC, Sinopec and CNOOC). The remainder is collected by the government and used to finance industry development.