China Raises Cost of Refined Oil and Electricity

June 22, 2008 12:00 am Last Updated: June 22, 2008 12:00 am

On June 19, China's Commission for State Reform and Development issued a notice that beginning on June 20, the cost of domestic refined oil and electricity would be raised.

Liquefied gas and natural gas prices will be left alone for the time being along with the price of electricity in three provinces (Sichuan, Sha'anxi and Gansu) that recently suffered earthquake disasters.

Gasoline and diesel prices are to be increased by 1,000 yuan ($145.00) per ton and aircraft fuel by 1,500 yuan ($217.40) per ton. Starting on July 1, the average cost of electricity will be increased by 0.025 yuan ($0.004) per kilowatt-hour.

China's rate of inflation has increased very fast in the past year. At one point last November, it even reached 6.9 percent which was the highest rate in 11 years. The Chinese regime worries that the increases in the cost of oil and electricity will further increase inflation resulting in social unrest. This past January, China's State Department made an announcement requesting that in the near future, the cost of refined oil, natural gas, electricity and water not be allowed to increase.

China's Commission for State Reform and Development said that half of China's crude oil is imported and the increasing rate of crude oil in the international market has made many oil refineries halt or partially suspend production. Recently, in some places people have to wait in long lines to fill up gas. Some gas stations have run out of gas or forced to sell limited amounts. The Central government in Beijing couldn't withstand the pressure anymore, so they had to increase the cost of the refined oil.

These increases in the cost of oil and electricity are expected to increase the rate of China's inflation. China's aviation, automotive and manufacturing industries are also expected to be affected.