Chinese gvt squares off with state oil companies

SHANGHAI – The Chinese government and its state-owned oil companies are locked in battle over artificially low petrol prices at the pump that have caused a massive shortage in the southern manufacturing province of Guangdong, analysts said yesterday.

For weeks skyrocketing global oil prices and rising demand has led to a fuel-supply crunch as domestic refineries have been caught short in Guangdong. Some fear it is only a matter of time before gas-guzzling cities such as Shanghai are hit too.The government has blamed recent stormy weather for the shortfall, which is feasible but not enough to result in the kilometre long queues at filling stations that drivers in Guangdong have endured for nearly a month.As oil prices climbed, a standoff erupted between China’s National Development Reform Commission – a key economic policy planning body – and the country’s two largest state oil groups PetroChina and Sinopec.The crisis highlights the persistent problems Beijing faces as the economy is transformed to a more market-based system but that is often retarded by authorities who fear losing political control in the face of full-fledged capitalist rules.In China, oil prices are set under a quasi-market system.The government fixes oil prices with reference to the previous month’s global trading levels in New York, Rotterdam and Singapore and then allows the price to float within eight per cent of daily trade.But as prices soared to US$67 (N$453,50) a barrel on international markets Sinopec and PetroChina dug in their heels.-Nampa-AFPSome fear it is only a matter of time before gas-guzzling cities such as Shanghai are hit too.The government has blamed recent stormy weather for the shortfall, which is feasible but not enough to result in the kilometre long queues at filling stations that drivers in Guangdong have endured for nearly a month.As oil prices climbed, a standoff erupted between China’s National Development Reform Commission – a key economic policy planning body – and the country’s two largest state oil groups PetroChina and Sinopec.The crisis highlights the persistent problems Beijing faces as the economy is transformed to a more market-based system but that is often retarded by authorities who fear losing political control in the face of full-fledged capitalist rules.In China, oil prices are set under a quasi-market system.The government fixes oil prices with reference to the previous month’s global trading levels in New York, Rotterdam and Singapore and then allows the price to float within eight per cent of daily trade.But as prices soared to US$67 (N$453,50) a barrel on international markets Sinopec and PetroChina dug in their heels.-Nampa-AFP