Oil pricing mechanism unveiled

• Source: The Global Times
• [09:52 May 11 2009]
• Comments

The country’s top economic planner announced details of the new oil pricing mechanism Friday.

The National Development and Reform Commission (NDRC) stated on its website that domestic fuel prices would be adjusted when global crude prices reported a daily fluctuation of more than 4 percent for 22 working days in a row.

The commission said refiners would enjoy “normal” profits when global crude prices were below $80 a barrel, but would face narrower profit margins when crude prices rose above $80.

The NDRC stated that fuel prices would not go up further, or would only be raised by a small margin, if crude went above $130 a barrel.

“There has been pressure to raise domestic fuel prices as crude prices continued to rise,” said Xu Kunlin, deputy head of NDRC’s pricing department, “however, the final decision will depend on developments in crude prices in coming days.”

Xu declined to reveal the evaluation process for monitoring international price changes. He said such details would remain a secret in a bid to prevent speculation.

The NDRC stated that the government would continue to control fuel prices due to insufficient market competition and imperfect market mechanisms.

Oil prices will eventually be determined by market forces, the commission stated.

(Xinhua)