THE National Development and Reform Commission (NDRC), China s economic planner and price regulator, said Friday it has asked local governments to crack down on some gas stations selling diesel above the State-set prices.
NDRC investigators found some gas stations have been selling diesel above State-set prices in the provinces of Sichuan, Hubei, Henan, Zhejiang, Jiangsu, Liaoning, Jiangxi and Shanxi and Chongqing Municipality.
The NDRC has requested local governments to punish the offending gas stations. The stations were ordered to stop overcharging and turn over illegal incomes to authorities, according to a statement on NDRC s Web site.
Also, the stations would receive punitive fines, it said.
Among the violators, Yueyuan gas station in Xichang, Sichuan Province, sold No. 0 diesel for 9 yuan (US$1.35) per liter, as against the State-set 6.55 yuan.
The NDRC said that consumers can call 12358 to complain about diesel overpricing and the price regulators will respond quickly.
The latest measures were adopted in the wake of those publicized Tuesday, which were aimed to stop some refiners and diesel wholesalers from overcharging.
An unprecedented diesel shortage has hit China s cities and markets, leading some wholesalers and gas stations to sell diesel above the State-set prices.
Due to the diesel shortage, some enterprises suspended production and express deliveries turned into snail deliveries.
People found that it took much longer for buses to arrive and even some crematories found it hard to get enough diesel for cremations.
The deadline for China s planned reduction in energy consumption is approaching. The country announced that it would reduce energy consumption by 20 percent per GDP unit during the 11th Five-Year Plan (2006-2010).
As a result, some provinces, under the pressure to meet the requirements, took emergency measures, such as limiting power supplies to cut energy consumption. This has pushed up the demand for diesel as factories turned to the fuel for power.
The second round of quantitative easing monetary policy by the United States also pushed up commodity prices. China raised oil prices Oct. 26 to narrow the gap with international levels, but expectations were not relieved on further rises of domestic oil prices, resulting in hoarding for profits.
China s oil price-fixing mechanism also contributed to the severe shortages this time, experts said.
According to the mechanism, which was updated in 2009, domestic oil prices can change after the international crude prices rise or fall more than 4 percent in 22 working days.
Domestic oil prices changed far behind international prices and the time lag may have encouraged arbitrage activities, said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.
Lin said China needs to further update the oil-price fixing mechanism to provide full play for prices in the market.(Xinhua)
