Posted on 09/13/2005 2:55:30 PM PDT by JeffersonRepublic.com
China has defended its refusal to lift pump prices to keep pace with rises in the global oil market over the last 12 months, saying further increases would damage local industries, the military and the economy.
Zhang Guobao, vice-chairman of the National Development and Reform Commission, the chief economic planning body that is also responsible for energy policy, acknowledged that Chinese rises had been allowed to fall behind the world, but said the issue was “complicated”.
The NDRC has mandated three increases since May this year, increasing pump prices by a total of about 25 per cent, compared with rises in global crude of about 65 per cent since the start of the year.
Mr Zhang, at a press conference in Beijing, identified three sectors that were particularly vulnerable to oil price rises: the taxi industry, agriculture and the military.
He said oil price increases would result in fewer people taking cabs, causing hardship to the industry, and prompt less “enthusiastic” efforts at production by farmers.
“Our military is using oil, in ships, planes, tanks and other vehicles, and all of it is paid for by the state, so this is an issue that requires a lot of thought,” he said.
China, especially in the south, has experienced oil shortages in recent months, partly because of the NDRC’s price controls. The local oil majors all but stopped selling imported crude because of the huge losses they were incurring.
Mr Zhang said subsidising industry to alleviate the impact of price rises was also difficult. “Even if we had the money for the subsidies, it would be very complicated to decide how it should be divided up,” he said.
The large coastal cities have been drafting plans to compensate taxi drivers for higher petrol prices.
Beijing’s transport bureau and some of the capital’s large taxi companies have decided to jointly provide monthly subsidies of up to Rmb300 ($37) for each driver to offset rises, a plan similar to one launched by Shanghai last month.
The high oil prices are having a ripple effect through other areas of Chinese policy, forcing the government to accelerate plans for alternate energy sources and delaying plans for a strategic oil reserve.
“I can clearly say that we will not purchase oil from the international market at the moment to fill up the oil reserves. We will study other means to gradually increase the reserves,” Mr Zhang said.
Mr Zhang also gave a bullish assessment of China’s own production capabilities for the future, saying he hoped that the present output of 180m tonnes a year could be maintained for the next two decades.
The NDRC estimates that China now relies on imports for only 6 per cent of its energy needs, although independent consultants put the figure at more than double this.
Still, China remains a lot less import-dependent than Japan and South Korean, which buy about 95 per cent of their energy needs offshore.
"China has defended its refusal to lift pump prices to keep pace with rises in the global oil market over the last 12 months, saying further increases would damage local industries, the military and the economy.
“I can clearly say that we will not purchase oil from the international market at the moment to fill up the oil reserves. We will study other means to gradually increase the reserves,” Mr Zhang said.
Mr Zhang also gave a bullish assessment of China’s own production capabilities for the future, saying he hoped that the present output of 180m tonnes a year could be maintained for the next two decades." ----
Looks like China is going to push for energy independence.
Hillary - are you taking notes?
I thought so.
Probably getting oil off-market from Iran.
I'm amazed the Chinese economy hasn't fallen to the ground yet.
Makes you wonder what they bartered.
China, I understand. They have little experience with free markets.
What's Hawaii's excuse?
Oh, yeah - Dim Legislators.
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