Government to Shorten Time in Adjusting Gas Prices

Government to Shorten Time in Adjusting Gas PricesThe government is planning to shorten the time in adjusting natural gas pricing to reflect better the domestic market fundamentals just falling short of giving a clear signal if a much anticipated price cut is near. Usually price adjustment is done once a year based on a scheme that was started in July 2013. The government last adjustment of gas prices as in April 1 that effectively merged a two tiered pricing into one to better track a oil market slump.

China ranks third in the world in gas consumption, but has been hit recently by a cooling economy and an inflexible pricing system. Under it’s pricing policy, Chinese industrial users are paying the highest prices in the world which is threatening the country’s target of curbing pollution and emissions by using more fuel. Industry players over the past months are speculating up to 30 percent cut wholesale or city gate gas prices for non residential users will be introduced to help boost the slump in the demand. Although the last cut in April wasn’t fully reflected in substitution fuels in which the regulated gas prices are benchmark, which curbed gas use in factories and slowed vehicles shift to fuel from gasoline and diesel.

Hu Zucai the vice chairman of the National Development and Reform Commission said that they are looking into shortening the periods and the government is also expanding a tier pricing reform for residential users of natural gas and eventually lower the subsidies and prevent wasteful use. The residential sector is around one fifth of China’s gas market and has been as key demand driver in the past decade and has seen gas consumption up by five fold from 2004 and 2013.

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