China cut fuel prices for the first time in 2011 as the government tries to rein in inflation. Wholesale gasoline prices and diesel prices were cut by 300 yuan, according to Chinese government news agency Xinhua.
The benchmark retail price of gasoline is being cut by 0.22 yuan per liter and diesel prices are being cut by 0.26 yuan per liter.
This represents a 3.5% decline in gasoline prices and a 3.9% fall in diesel prices according to prices in an October 8 statement by the The National Development and Reform Commission (NDRC).
China’s fuel prices are adjusted by the NDRC and it last cut oil-product prices in June 2010 and increased it 4 times since. The organisation adjusts domestic fuel, diesel and gas prices when average prices for Brent, Cinta and Dubai crude oil move by 4% in 22 straight business days. China Petroleum & Chemical Corp. and PetroChina Co. were both asked to offer fuels at a lower price as inflation continues to be above target.
Meanwhile, China extended a value-based tax on oil and natural gas sales across the country starting next month in a bid to clampdown on energy use, Bloomberg reported. The tax will be 5% – 10% of sales and could impact energy giants that stand to lose about $6.50 for every barrel of imported oil refined into fuels.
After a week-long holiday, the Shanghai Composite fell 0.61% with energy stocks selling off. But the ADRs currently trading in US markets are mixed. China Petroleum & Chemical Corp. is down 2.74%. Meanwhile, Sinopec a unit of China Petrochemical Corp. is buying Canadian oil & gas company Daylight Energy Ltd. for C$2.2 billion. PetroChina Co. Ltd. is up 0.8% Sinopec Shanghai Petrochemical Co. Ltd. is up 0.93%