China has raised petrol and diesel prices for the first time in 17 months in a bid to curb a worsening fuel crisis.
|The increase in petrol prices are |
the first in 17 months [AFP]
The rise in prices by a tenth on Thursday were designed to ease supply difficulties caused by losses in earnings at state oil refiners.
Officials will hope the revenue rise will spur refiners to increase production and imports, reducing shortages that have caused queues, widespread rationing and at least one death
The move will help balance the books of Asia's top refiner Sinopec, which has coped with mounting losses by selling fuel at the regulated, below-market prices that Beijing maintains to avoid inflation and social unrest.
Its US-listed shares had soared over 10 per cent from the price at market closing on the previous day.
Thursday's rise is meant to narrow the gap between domestic prices and soaring international crude costs, according to the National Development and Reform Commission, the country's main planning agency.
"To ensure the supply of domestic oil products and the promotion of energy conservation, the state decided to properly increase the prices of oil products," the NDRC said.
Sign of concern
It said the price rise also would apply to aviation fuel.
"It's better than nothing, but it will not yet change loss into profits," a refining industry source, who declined to be named, told Reuters after the announcement.
The increases are in line with Beijing's long-term promise to free up prices of natural resources.
But coming after a September pledge not to raise state-regulated prices this year, they were a sign of concern amid fast-spreading shortages.
The NDRC said the increase in prices was likely to add 0.05 percent to the country's monthly consumer inflation rate.
Inflation hit an 11-year monthly high of 6.5 per cent in August. It eased to 6.2 per cent in September but the rate for the year is expected to be well above the official target of three per cent.
The price of oil has hit record highs again in the US, amid concerns over dwindling supplies.
Light, sweet crude oil for December rose to more than $96-a-barrel on Wednesday.
The news came after a shock decline in stocks, ahead of the peak demand during the northern hemisphere winter.
Supplies are seven percent down on last year.