China cuts gasoline, diesel prices from today

Shanghai, December 19 (Gasgoo.com) China started to cut prices for gasoline, diesel and jet fuel at the zero hour today. The price of gasoline is cut by  0.91 yuan ($0.133) while the price of diesel has fallen by 1.08 yuan. Jet fuel prices has dropped by 2,400 yuan per ton. The cuts will help trucking companies, airlines, factories and others that are being squeezed by high fuel prices and a slump in sales, state media reported Friday.

The benchmark price for gasoline was cut from 6.37 yuan per liter to 5.46 yuan and diesel from 6.23 yuan per liter to 5.15 yuan starting Friday morning, according to the Xinhua news agency. "The (gasoline) price cut of 0.91 yuan per liter means a monthly saving of 900 yuan for a taxi driver," said Mr. Qu, a Beijing cab driver waiting in Thursday's midnight dark for the clock to turn zero.

The government distributed the news of the price cut via all major media and short messages to cell phone users on Thursday evening. Nevertheless, there was no queuing-up at the gas station in the early morning hour.

The fuel price cut this time is seen as China's revamp of its oil pricing system to let it pegged with the global market. The National Development and Reform Commission (NDRC) made it clear Thursday that domestic fuel prices would remain unchanged on January 1, 2009, when the fuel tax is expected to kick in.

Post-tax retail price would remain unchanged next year as fuel producers would lower the factory-gate price again to offset the tax. But for fuel producers, the price cut reduced their sales profit. "It will have a short-term impact on our profit, but we expect the global prices to rise in future. This will secure the long-term profit," said Shu Zhaoxia, a researcher with Sinopec, Asia's largest refiner.

Industry experts said the country's first fuel price cut in almost two years would help revitalize companies and factories eking out amid the economic slowdown.

Among industry beneficiaries, the aviation sector would see an immediate effect because the benchmark prices for jet fuel was slashed by a bigger margin of more than 30 percent, or 2,400 yuan, to 5,050 yuan per ton.