Wed, Aug 17, 2005 page11

• South, east China hit with gas and diesel shortages

  RUNNING ON FUMES Officials were working hard to address supply problems resulting from government price controls as massive lines formed in affected areas

  • AP
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  Officials scrambled yesterday to resolve severe gasoline and diesel shortages in China's south and east amid complaints that government price controls are worsening supply problems.

  Drivers in the southern province of Guangdong were waiting for hours for gas in lines up to a kilometer long, sometimes leaving with empty tanks when supplies ran out, state media reports said.

  In the southern city of Shenzhen, which borders Hong Kong, more than half of all gas stations closed Monday as shortages worsened, the Hong Kong-based newspaper South China Morning Post reported yesterday.

  Although disruptions to tanker traffic due to recent typhoons were one factor, the crisis is mainly blamed on government price controls that prevent local refineries from passing on higher costs due to surging crude oil prices.

  Signs of supply shortages began surfacing earlier this month, with reports that Guangdong filling stations were limiting vehicles to 50 yuan (US$6) worth of fuel -- or about 11 liters of gas.

  At the pump in Guangdong, gasoline currently retails for 4.28 yuan a liter.

  An official in the Shenzhen government's information office confirmed that the city was struggling to resolve the problem, saying it would take some time. In the meantime, the official, who refused to give his name, provided a list of 56 stations -- out of more than 200 in the city -- that he said still had fuel to sell.

  The daily supply of gasoline to the city was about 40,000 liters, while demand is well over 70,000 liters, the Post reported.

  "Generally speaking, the petrol supply in Guangdong is tight," said a publicity department official in the Guangdong branch of China Petroleum and Chemicals Corp (中石化) -- also known as Sinopec.

  The outlook for just about every fuel category was "not optimistic," said the official, who gave only her surname, Huang.

  Reports said the shortages had spread to Shanghai and eastern China's Zhejiang Province. Shanghai's city government and filling station employees denied the city was facing shortages.

  The government has appealed to major fuel suppliers Sinopec and China National Petroleum Corp (中石油) to boost shipments into Guangdong.

  "Sinopec is trying to transport oil from other parts of China to fulfill Guangdong's needs," said Huang. But she added, "It does not totally depend on us."

  The shortages have prompted unusually forthright calls in the state-controlled media for changes in controls that fix gas and diesel prices at levels lagging well behind changes in international crude oil prices.

  The shortfalls have "started alarm bells ringing because of the dire consequences a poorly regulated oil industry could bring about for this increasingly energy-thirsty country," the state newspaper China Daily said in a commentary Monday.

  Pump prices in China rose an average of 20 percent year-on-year in the first five months of the year, while international crude oil prices surged 30 percent. Crude oil prices were hovering above US$66 a barrel yesterday, about 46 percent above the level a year ago.

  With those higher costs eating into profits, domestic refiners reported net losses totalling 4.19 billion yuan in the first six months of this year, down from a net profit of 16.4 billion yuan a year earlier.
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