More reductions likely in 2015 as international crude levels fall
A gas station in Nantong, Jiangsu province. Continued falls in global crude oil prices have triggered another cut in domestic retail fuel prices, with the nation’s top economic planning agency saying that the revised prices will come into effect on Dec 27.[Photo/China Daily]
The continued fall in global crude oil prices has triggered another cut in domestic retail fuel prices, with the nation’s top economic planning agency saying that the revised prices will come into effect on Dec 27.
According to the National Development and Reform Commission, China will cut retail gasoline prices by 520 yuan ($83.6) a metric ton, or 0.4 yuan for each liter and for diesel by 500 yuan a ton, or 0.43 yuan a liter.
Reacting to the international crude price swings, China has already cut retail prices 14 times and hiked them four times this year. The next price adjustment is scheduled on Jan 12 based on the current pricing mechanism.
Han Jingyuan, a crude analyst at JYD Online Corp, a Beijing-based bulk commodity consultancy, said given the slowing global crude demand and increasing energy supplies from the United States and the Organization of the Petroleum Exporting Countries, oil prices will continue to drop.
In 2014 gasoline prices in China dropped 2,050 yuan a ton, or 1.54 yuan a liter, and diesel prices 2,205 yuan a ton, or 1.89 yuan a liter after adjustments, according to data provided by consultancy firm Shandong Longzhong Information Technology Co.
Li Yan, a crude analyst with the consultancy, said with Saudi Arabia unwilling to cut crude output, prices are expected to fall further in the coming months. He said that China will cut retail prices again during the next pricing adjustment window.
“Considering the huge losses that the domestic refineries may incur, the authorities may also increase prices to protect the petrochemical industry, which is in accordance with the pricing regulations,” he said.
Xu Ying, an oil market analyst with Longzhong, said the country’s demand for refined oil products is weakening this year driven by the slowing economy. On the other hand, the rising domestic refining capacity has triggered a price decline in the oil products wholesale market.
“Many small-scale refineries had to offer huge discounts,” she said.
Xue Qun, an analyst with the consultancy, said the fuel price cut will help domestic logistics companies reduce their costs, which is beneficial for the industry.
Fuel costs for a delivery truck will drop by 1,505 yuan for each 10,000 kilometers, she said. “A driver can save 32 yuan for each 1,000 kilometers with a family car, which is a good news for the public,” she said.
Non-fossil energy rises in the mix
Non-fossil fuels accounted for 11.1 percent of China’s primary energy use in 2014, up from 9.8 percent last year, as the world’s second-largest economy cut emissions to fight climate change, a senior official said on Dec 25.
Non-fossil fuel refers to solar, wind, hydropower and nuclear energy.
The share of non-fossil fuel will rise to 15 percent in the primary energy mix by 2020, according to a national plan released in 2009.
Wu Xinxiong, head of the National Energy Administration, told a national energy conference in Beijing that China will implement measures to further reform its fuel and power consumption structure and establish a secure, stable and clear energy supply channel.
He said the proportion of coal fell to 64.2 percent of energy consumption this year from 65.7 percent last year.
He estimated that China has 300 gigawatts of installed hydropower capacity, 90 GW of wind and 30 GW of solar energy.
There are 22 nuclear power units operating, with total generation capacity of 20.1 GW.
The nation made breakthroughs in shale gas, coalbed methane and deep-water oil and natural gas exploration this year, Wu said.
The NEA said China produced about 1.2 billion cubic meters of shale gas and 17.1 billion cu m of coalbed methane this year.