China on borrowed time over fuel price rise

BEIJING (Reuters) – China must raise gasoline and diesel prices within days or risk more political lobbying and speculative fuel hoarding that would further erode the credibility of a landmark pricing reform launched just months ago.

The government faces a dilemma: raise fuel prices, rewarding speculators at the cost of hard-pressed farmers and industries; or leave them unchanged, betraying its pledge to make fuel prices more transparent and let them fluctuate more freely.

Only a sharp fall in crude oil prices — hovering near six-month highs at around $60 a barrel — would relieve pressure for a price change and get officials off the hook.

Beijing appeared on the brink of raising prices weeks ago, but pulled back at the last moment, industry officials say.

Reuters