China’s revised jet fuel pricing formula a “big step”

China is still looking to improve its fuel pricing methods. The current method of pricing fuel is designed around price changes which are triggered when crude oil prices change by 4% over a 22-working day cycle doesn’t always work according to plan. The National Development & Reform Commission (NDRC) has failed to follow these guidelines when a cycle is too long or the price range is too wide. NDRC also has delayed price hikes due to inflation or made the increase too low in relation to the price of crude oil. Possible policy changes include shortening the 22-working day cycle or narrowing the range to make the adjustment more frequently. One new change is that the NDRC will begin in August to link aviation fuel pricing with ex-refinery prices and Singapore spot quotes which will be updated once a month. The NDRC said the “revamped jet fuel pricing is one big step towards a market-oriented system. It’s also an experiment for reforming China’s refined fuel market.” (July 28, 2011)