China Increases Gasoline and Diesel Prices with High Oil Costs
China, the second largest consumer of oil, raised its current gasoline prices and other fuel prices for the first time since the month of March following a steady increase in the crude price per barrel.
The maximum increase in the current gasoline price will be 390 Yuan, or $61 per metric ton, and the highest diesel price increase will be 370 Yuan, according to a recently posted statement from the National Development and Reform Commission on its website.
The rise in the price of 90-RON China III in Beijing is around 4.3% to 9,490 Yuan per ton, or $4.27 per U.S. gallon, according to the calculations of Bloomberg from the data of NDRC. Note when comparing China’s gas prices to those of the US that the RON rating of US regular gasoline is 91-92. The specification of China III is almost the same as the fuel standard of Euro III.
China is increasing fuel prices with a 7.6 percent slowdown in its economic growth for quarter two of this year, the weakest rate in over three years. The country reduced its fuel prices three times from May to July, which helped drivers and truckers with the cheapest fuel costs since December 2010. In July, inflation cooled for the fourth consecutive month at 1.8%, according to the National Bureau of Statistics’ recent data.
C1 Energy, the statistics arm of the Chinese fuel regulatory system similar to the US Energy Information Administration, said that this is the first time that the NDRC increased fuel prices in a timely manner, possibly due to the fact that August isn’t a month of high consumption and because inflation pressure has lessened.
Gasoline and diesel costs are assigned by the NDRC based on a system that observes the moving average over 22 days of a set of crude blends including Dubai, Cinta and Brent. In London, the crude price per barrel of Brent rose 7.3% in the month of July.
The basis of the change in the fuel price is the present pricing mechanism and the latest fluctuations in the international crude price per barrel, said the NDRC in another statement. The three crude grades have increased by over 4% in the last 22 working days as of the 8th of August, crossing the threshold for a raise.
The increase in the current gasoline prices will help two of the country’s largest fuel producers’ profit margins, including China Petroleum & Chemical Corp and PetroChina Co. Each of the companies reported wider refining losses in quarter one due to state-restricted gasoline rates.