Effective 1-June 2009, China raised domestic petrol and diesel prices by 400 yuan (US$58.58) a metric ton each, in responce to rising crude oil prices. Crude oil prices have broke through the psychological barrier of USD 65 per barrel price to reach a six month high.
Like Malaysia, China regulates its energy prices. Under China's new oil-product pricing reforms introduced at the start of this year, domestic fuel prices may be adjusted when the moving average of a crude basket changes more than 4% over a period of 22 working days. There is also a clause to guarantee refineries a 5% profit margin as long as international crude prices are below USD80 a barrel. The Malaysian government reviews fuel prices on a bi-monthly period with the new revised price effective on the first day of the month.
This has translate to a 7% increase in fuel prices at the pumps, which is still short of the 10% increase demanded by Chinese national oil company Sinopec. Below is the new fuel prices in Beijing.
Fuel Type / Previous Price (rmb)/ New Price(rmb) / Increase(rmb)
90# 5.21 5.51 ↗0.30
93# 5.56 5.89 ↗0.33
97# 5.92 6.27 ↗0.35
98# 6.47 6.82 ↗0.35
0# (diesel)5.42 5.76 ↗0.34
There are various reasons to this - none of which is related to increase in oil or energy consumption. Crude oil stockpile in the United States - still the largest oil consumer per capita is at a 19 year high. The value of the greenback has taken some beating lately and since crude oil is traded in US dollars, it costs more US dollars to buy the same value of oil now. But chief among this are a mysterious network of speculators and energy traders who act as middlemen between oil producers and buyers who were quick to jump in again on the little positive economic data that are trickling in.
Goldman Sachs forecast that crude oil prices will probably reach USD 90 per barrel within the next 12 months. You have been warned.
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