A higher domestic oil price would benefit China's aim to reduce
energy consumption and greenhouse gas emissions, Cao Changqing, an
official with the National Development and Reform Commission
(NDRC), said on Thursday, in the clearest indication yet that the
government is considering raising the price of oil.
Despite soaring international oil prices, domestic oil prices
have been kept 25 percent lower, which has failed to reflect the
scarcity of energy resources and has led to enormous waste,
according to Chen Qingtai, a researcher with the Development
Research Center of the State Council.
Dong Xiucheng, a professor with the China University of
Petroleum, said earlier this year that "it was impractical for
China to advocate saving energy and reducing emissions without
reforming domestic energy prices." "As the gap between domestic and
international prices is widening again, domestic oil refineries
face higher production costs," said Cao.
International oil prices will remain high in the latter half of
the year, lifting the annual average price to US$65 per barrel for
the full year, according to a recent forecast from the Ministry of
Commerce.
But China is in a dilemma because raising oil prices will add to
the burden on downstream firms and on other sectors - including
transportation and manufacturing, said Cao.
Keeping oil price reform within the economy's capacity to adapt
to it, the government will ensure a sufficient oil supply, continue
to subsidize oil refineries and try to strike a balance between the
reform and economic stability, he added.
(Xinhua News Agency July 27, 2007)