New Fuel Pricing Adjustments Introduces More Flexible Method in Pricing
China’s top pricing regulator will introduce a more flexible method in pricing domestic fuel and with the new adjustments allows if international oil prices fluctuates between $40 and $140 a barrel. Liquefied petroleum gas pricing will be solely market based on a statement released by the National Development and Reform Commission. Under the new pricing system, the commission lowered domestic gasoline and diesel prices by 140 yuan and 135 yuan a barrel, and these price cuts are equivalent to 0.1 yuan reduction for standard gasoline and 0.11 yuan for standard diesel.
The director for China Center for Energy Economics Research at Xiamen University Lin Boqiang, stated that the market based pricing of liquefied petroleum gas will be a good starting point. Having sufficient supply and increased in production capacity of domestic enterprises, the government still sees how this is implemented and further extended the pricing system into other areas.
Although China might not lower fuel prices anytime soon amid global falls with oil plunging to a 12 year low of around $30 per barrel, its main concern is to protect the nation’s energy security and promote the use of resource conservation and new energy development to fight air pollution. Fuel price that is too low will deepen the level of China’s dependence on the external oil market. It is also detrimental to air quality and the shift towards the increase use of new energy. The new price adjustment range will provide domestic producers with opportunities and know better the appropriate pricing range before a completely market based system.