China Oil Price May Drop With Fuel Tax Reform
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The National Development and Reform Commission (NDRC) and three other government agencies have recently unveiled a draft plan of fuel taxes and refined oil product pricing to seek public opinion. The plan, to take effect on Jan. 1, will raise gasoline taxes from 0.2 yuan per liter to 1 yuan and diesel taxes from 0.1 yuan per liter to 0.8 yuan. Meanwhile, it will scrap six fees now charged for road or waterway maintenance and management.
Xu Kunlin, deputy director of the pricing division of the NDRC, told reporters in Beijing on Tuesday that there was room for lowering the current fuel prices when the country begins reform of fuel taxation and refined oil product pricing system. "When the fuel taxation reform begins, we will adjust the fuel prices based on the world oil price then," Xu said.
Chinese drivers are paying much more than those in many other countries because domestic fuel prices have been unchanged since June despite plunge of world crude oil prices. Government-set prices are changed only infrequently. Last week, 1,773 car owners reportedly submitted a petition to the top economic planner, urging it to lower fuel prices before levying a higher fuel tax.
Take gasoline 93, the most commonly used type of fuels. The current price stands at 6.37 yuan ($0.93) per liter in Beijing and 6.20 yuan in the other parts of the country. It is higher than in the United States, where the average weekly retail price of gasoline fell to $1.699 a gallon (3.8 liters) as of Monday, the lowest point since Feb. 2004.
Industry experts said the current global oil price plunge presents an opportunity for China to reform its fuel pricing system to follow the world market trend. The retail gas price should drop rather than increase after this reform begins. However, the higher fuel tax may also urge people to buy energy-efficient cars.
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