China's Once-Subsidized Drivers Face Gasoline Hit: Chart of the Day
China, the world’s biggest new-car market, may raise gasoline prices by 20 percent this year to promote energy efficiency, according to Mirae Asset Securities Co., straining once-subsidized drivers who paid less than Americans to fill their tanks barely two years ago.
The CHART OF THE DAY shows the national average benchmark prices of gasoline sold to motorists in China, the U.S. and U.K. in dollars per liter, based on data compiled by Bloomberg. While Chinese drivers started paying more at the pump than U.S. counterparts around December 2008, they still pay half the cost of drivers in Britain.
“Chinese fuel-demand growth should start to slow more meaningfully, and awareness of the need for fuel conservation will become more acute,” Gordon Kwan, head of regional energy research at Mirae in Hong Kong, said in a report. A key impetus for conservation will be price increases of gasoline by about 4 percent every two or three months, in line with rising crude costs, he said.
The government introduced a new fuel-pricing mechanism in December 2008 that tracks global crude costs. A month later, it raised a gasoline consumption tax fivefold, pushing domestic pump prices above those in the U.S. and ending an era of cheap, subsidized fuel. The government has made 13 price adjustments since introducing the system, most recently on Dec. 22.
Zhang Guobao, head of the National Energy Administration, was quoted on Jan. 6 by the official People’s Daily newspaper as saying that China will “reasonably” control its energy use in the five years through 2015. The government implemented measures that included shuttering factories last year after energy use per unit of gross domestic product expanded in the first half, threatening to derail a goal for the previous five years.
State support helped China surpass the U.S. as the world’s largest auto market in 2009. Beijing tied with Mexico City as having the world’s worst commute, according to a survey of 8,192 drivers in 20 cities worldwide by International Business Machines Corp. last year. The research included factors such as traffic predictability, gasoline prices and emotional stress.
(To save a copy of the chart, click here.)
--Chua Baizhen. Editors: Lee J. Miller, Jane Lee.
To contact the reporter on this story: Baizhen Chua in Beijing at bchua14@bloomberg.net
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
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