Beijing ups gasoline prices, social unrest feared
The retail "guidance" price for petrol was raised by 16.7 per cent to 6,980 yuan a tonne; that for diesel by 18.1 per cent to 6,520 yuan a tonne.
Retail electricity prices went up by an average 4.7 per cent, except for Xinjiang and areas hit in May by the Sichuan earthquake.
In order to stifle social unrest the government also imposed temporary ceilings on coal whose prices must not be higher than those reached yesterday until further orders.
The last measure seems however quite pointless since coal is used only industry and to a lesser extent in the rural areas where it is mined.
Higher fuel prices will instead affect the rich southern regions and the big metropolitan centres like Shanghai where there was a run on gas stations by drivers anxious to buy gas before the new price kicked in.
The government has tried to defend its decision to hike fuel prices.
“Due to the sharp spike in international oil prices, some refineries had to be shut down, with queues at petrol stations and rationing re-emerging in some regions,” the National Development and Reform Commission (NDRC) said. “Appropriate increases in fuel prices will help raise supply and promote energy conservation.”
“The increase is helpful, but given they are losing US$ 50 for each barrel they process, they are still far from returning to profitability, unless more measures are taken,” Kim Eng Securities analyst Larry Grace said.