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The latest price hike for gasoline, diesel and aviation fuel by 500 yuan (US$62.5) per ton puts China prices closer to international market standards, and is likely to encourage energy saving and promote fuel efficiency, planning officials said yesterday.

 

The increases will also contribute to sustainable development, according to National Development and Reform Commission (NDRC) officials.

 

The price hikes, effective yesterday, are the ninth for refined oil products since July 2003, and this 10-percent increase is the highest to date.

 

"Higher prices on oil products will encourage efficiency," said Zhang Guobao, vice chairman of the NDRC, at a seminar. Niu Li, an economist with the State Information Center, said they would bring domestic oil prices more in line with international standards.

 

Lower domestic prices have resulted in losses for oil refiners and encouraged consumer wastage, Niu noted.

 

According to an NDRC statement, prices of processed oil in China are far below international levels where crude prices hover around US$70 a barrel.

 

"The unreasonably low price was a key reason for high levels of resource consumption," another NDRC official said yesterday.

 

China's average resource consumption per unit of gross domestic product (GDP) was 3.4 times the world average in 2004, statistics show.

 

Streets near gas stations were jammed on Tuesday night as car owners rushed to buy cheaper fuel.

 

"I didn't see the same thing the last time fuel prices were raised," said He Jun, a senior resource analyst.

 

The last price hike was on March 26, when the price of gasoline was raised by 300 yuan (US$37.5) per ton and diesel by 200 yuan (US$25) per ton.

 

The retail price of 93-octane gasoline is now 5.09 yuan (64 US cents) per liter, representing an increase of 0.44 yuan (5 US cents).

But it is still way below UK prices, which hit 1 pound (15 yuan) in parts of the country this month.

 

"I will have to pay 50 yuan (US$6.2) more a month on gasoline because of this rise," said Chen Yi, who earns 5,000 yuan (US$620) a month in the publishing industry.

 

Chen said gasoline was still affordable, but said he would think twice before getting behind the wheel.

 

Car dealers predict that more people would choose to buy small-engine cars to cut down on fuel costs or might hesitate to buy altogether.

 

According to an online survey on www.sina.com.cn, one of China's leading Internet portals, nearly 87 percent of the 80,000 people surveyed said they would reconsider plans of buying a car.

 

Huang Shan, a Beijing resident, said he would put off his car purchase plan. "As taxi fares have also risen, I think the best way is to take public transport," he said.

 

(China Daily, Xinhua News Agency May 25, 2006)