China faces a quandary over oil

Situ Yu, a 28-year-old Beijing resident, often chooses public transportation nowadays, although she bought a Ford Focus in 2007.

“The gasoline price is so expensive now. I have to tighten my belt,” she said, adding that she has to pay around 1,000 yuan to buy fuel every month.

China has adjusted domestic refined oil prices eight times this year, with five increases and three reductions. At present the 93-octane gasoline, which fuels most of Beijing’s taxis and private cars, sells at 6.66 yuan per liter, an historical high.

The country adopted a new oil pricing system this year. Under the mechanism domestic refined oil prices are adjusted when the moving average of a basket of international crude (Brent, Dubai and Cinta) changes more than 4 percent over a period of 22 working days.

Under the system domestic refined oil prices are more linked with global crude prices. However, it also evoked wide debate on whether the fuel price or the pricing system was reasonable.

China Daily