China to continue oil product pricing reform

China said it will continue to reform its oil product pricing mechanism based on changes in the domestic and international markets. On January 1, the government started to change benchmark retail prices of oil products when the international crude price rises or falls by a daily average of 4% over 20 days. The new mechanism aims to indirectly link domestic prices to global crude prices “in a controlled manner,” after domestic refiners suffered huge losses because of a gap between government-set retail prices and soaring global crude prices. The new measures reflected international price fluctuations, corporate production costs, domestic demand, and oil resource scarcity, and were also conducive to environmental protection and introduced competition in distribution, the statement said. The benchmark price of gasoline currently sits at 7,100 yuan (US$1,039.03) a ton and that of diesel 6,360 yuan (US$931.55) a ton, after five price increases and four price cuts in 2009. (December 28, 2009)