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China Raises Gas Prices

Mike

Well-known member
China Raises Fuel, Power Prices to Curb Energy Demand (Update2)

By Wang Ying and Winnie Zhu

June 20 (Bloomberg) -- China, the world's second-biggest oil-consuming nation, unexpectedly raised gasoline and diesel prices by at least 17 percent and increased power tariffs to rein in energy use, potentially driving up inflation.

The record price increase, the first since November, may ease refining losses at China Petroleum & Chemical Corp. and PetroChina Co., who have been forced to sell fuels below cost. The companies' shares rose in Hong Kong trading.

Crude oil futures fell the most in 11 weeks in New York yesterday on speculation the increase, earlier and larger than analysts had forecast, will cut demand. China will pay 19.8 billion yuan ($2.9 billion) in subsidies to help farmers, fisherman and public transport operators cope with higher costs.

``This pushes inflation up in China but contributes to easing inflationary pressure elsewhere in the world,'' Merrill Lynch & Co.'s head of global commodities research, Francisco Blanch, said by phone yesterday.

Gasoline will increase 17 percent today, diesel will rise 18 percent and jet fuel will climb 25 percent, the National Development and Reform Commission said yesterday. On July 1, China will raise power prices by an average 4.7 percent and cap thermal coal prices until the end of this year.

The price increases may boost China's inflation rate by as much as 1 percentage point this year, according to seven economists surveyed by Bloomberg News today. Their estimates of the likely boost to consumer prices ranged from 0.13 percentage point to 1 percentage point.

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A side effect to note* Oil Prices fell on this news. Still say supply and demand does not matter? :lol: :lol: :lol: :lol:
 

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