China to launch new fuel price adjustment system

(CHINADAILY)China'stoppricingregulatoristointroduceamoreflexiblemethodforpricingdomesticfuel,withadjustmentsallowediftheinternationaloilpricefluctuatesbetween$40and$140perbarrel.

Thepricingofliquefiedpetroleumgaswillbesolelymarket-based,accordingtoastatementreleasedbytheNationalDevelopmentandReformCommissiononWednesday.Underthenewpricingsystem,thecommissionhaslowereddomesticgasolineanddieselpricesby140yuan($21)and135yuanabarrel,respectively,startingfromThursday.Thesecutsareequivalenttoa0.1yuanreductionforstandardgasolineand0.11yuanforstandarddiesel.

LinBoqiang,directoroftheChinaCenterforEnergyEconomicsResearchatXiamenUniversity,said,"Market-basedpricingofliquefiedpetroleumgasisagoodstaringpoint.

"Withsufficientsupplyandincreasedproductioncapacityofdomesticenterprises,thegovernmentwillbeabletoseehowthisisimplementedandfurtherextendthepricingsystemstootherareas,"Linsaid.

ThecommissionsaidthatwhileChinamaynotlowerfuelpricesfurtheramidglobalfalls-withoilplungingtoa12-yearlowofabout$30abarrel-themainconcernisprotectingthenation'senergysecurityandpromotingtheuseofresourceconservationandnew-energydevelopmenttocombatairpollution.

"AfuelpricethatistoolowwoulddeepenthelevelofChina'sdependenceontheexternaloilmarket,whichhasalreadyreached60percent.Itisalsodetrimentaltoairqualityandtheshifttowardincreaseduseofnewenergy,"thecommission'sstatementsaid.LiaoNa,vice-presidentofindependentenergyconsultancyICISC1,said,"Thenewpriceadjustmentrangeprovidesdomesticproducerswithopportunitiestobetterknowtheappropriatepricingrangebeforeacompletelymarket-basedsystem."

XuShaoshi,headofthecommission,saidinanarticlepublishedinStudyTimesonJan4thatChinawillseecompletemarket-basedoilpricingbytheendofthe13thFive-YearPlan(2016-20).