China announced on Monday that it won’t lower fuel prices until global crude prices fall by 4%. But this controversial decision may give only half the story, according to Economic Observer:
In truth, it’s likely that the decision not to lower prices might have another explanation. An expert from the CPCIA (China Petroleum and Chemical Industry Association), told the EO that prices will not be lowered because the profitability of the refining sector is in rapid decline and there has been a drop off in investment in upstream activities such as oil drilling.
China’s oil refiners must be losing a ton of money if the government would prop them up at the cost of social unrest.
When coal factories and taxi drivers begged for permission to charge higher prices due compensate for high fuel costs, the government told them to eat their losses.