China increases fuel prices for the second time in the year

China increases fuel prices for the second time in the year

2011-04-08 02:46:13 GMT+7 (ICT)

BEIJING, CHINA (BNO NEWS) -- China on Thursday increased the retail gasoline and diesel prices for the second time this year to rising demand as international oil prices have been forced higher by recent unrest in the Middle East, the state-run Xinhua news agency reported.

The price hikes became effective as of the first minute of Thursday. Hundreds of Chinese people went to gas stations on Wednesday night before the midnight deadline. Citizens expressed their surprise at the second fuel price hike of the year as the first was made on February 19.

Long queues were registered at gas stations as the gasoline price rose by 500 Yuan ($76.34) per ton or an extra 0.37 ($0.056) Yuan per liter. Diesel price rose by 400 Yuan ($61.13) per ton or 0.34 Yuan ($0.053) for each liter.

The Chinese government said that the fuel price hikes were a consequence of the supply shortage from Libya due to the ongoing conflict as well as the increase of demand stemming for the post-earthquake reconstruction in Japan.

Experts said the oil price increase will add to inflationary pressure in China. The country's consumer price index (CPI), a major gauge of inflation, has remained high since mid-2010.

In February, China's CPI jumped 4.9 percent in comparison with the 2010 figures for the same month. This percentage exceeded the government's full-year target of 4 percent. It is expected that the CPI will rise by 0.7 in April due to the high fuel prices.

The prices hike is not consistent with the record earnings registered by China's oil giants. China Petroleum, known as Sinopec, informed that its 2010 net profits rose 13.7 percent from one year earlier to 71.8 billion Yuan ($10.97 billion).

On the other hand, China National Offshore Oil Company Ltd. recorded an 84.5 percent rise in profits last year while PetroChina Co. posted a 35.4 percent increase for the same period.

China announced it will provide subsidies for the low-income groups such as farmers, bus companies and taxi drivers. On Tuesday, the international oil price rose to a two-and-a-half-year high, with Brent crude hitting $120 a barrel.

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