Gasoline and diesel prices to increase as tinkering by China's government helps boost oil majors’ profits.
Retail prices of gasoline and diesel will increase by 0.24 yuan and 0.26 yuan, respectively, according to the National Development and Reform Commission. The hike will be the fourth fuel price adjustment by the top economic planner this year, the second in July and the biggest increase since September 2012.
More pain for China's motorists? |
The rises are evidence of the Government’s latest initiative, which came into effect in March, allowing the NDCR more flexibility over its pricing system and enabling it to adjust fuel prices over a 10-day period.
While rising prices may dampen consumer demand, Sinopec is reaping the benefits of more flexible oil pricing. Sinopec Shanghai Petrochemical, the operator of China Petroleum & Chemicals, has posted a profit for the first six months of 2013.
After a 6.3bn yuan ($1bn) upgrade of the company’s facilities, the company made close to 400m yuan ($65m) in savings. According to company chairman Wang Zhiqing, the nimbler pricing mechanism meant “every $1 of crude oil cost cut translates into some 700m yuan of savings for us annually.”
The company posted a first half profit of 438m yuan ($71.4m) this year, a sharp turnaround from a 1.19bn yuan (£194m) loss in the same period last year.