China, the world’s second-biggest oil consumer, cut gasoline and diesel prices in the first adjustment under new controls after crude declined.
Retail gasoline falls by 395 yuan ($64) a metric ton and diesel by 400 yuan, effective today, the National Development and Reform Commission, the country’s top economic planner, said on its website yesterday. The reduction is in line with changes in average global crude costs in the past 10 working days and includes an amount from the last price review, it said. The pump price of 90-RON, China III gasoline in Beijing drops 4 percent to 9,325 yuan a ton, or $4.31 a U.S. gallon, the NDRC figures show.
The government changed the pricing mechanism for oil products to better reflect movements in international crude costs and reduce speculation, the NDRC said in a statement announcing the measures on March 26. The first review was on April 10, when the NDRC said the adjustment signaled was too small to be implemented and would be rolled over to the next appraisal.
Under the new rules, fuel tariffs are reviewed every 10 working days. The NDRC may hold off from a revision if gasoline or diesel is due to rise or fall by less than 50 yuan, or when the country is facing “significant” circumstances such as high inflation or steep increases in international prices. The NDRC hasn’t said which crude grades it tracks.
Under the previous mechanism, introduced in December 2008, the NDRC tracked the 22-working-day moving average of a mix of Brent, Dubai and Cinta. It only considered a price revision if the average moved more than 4 percent from the previous change.
London-traded Brent, the benchmark price for more than half the world’s oil, has dropped 8 percent since March 26. West Texas Intermediate has fallen 7 percent in New York.