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High oil prices hit Chinese petrol stations

by Staff Writers
Beijing (AFP) Oct 28, 2007
Fuel shortages were reported at petrol stations throughout China Sunday as the cost of oil on the domestic market lagged behind record global prices, prompting refiners to slow deliveries.

Petrol stations were temporarily closed or refusing to sell petrol and diesel in Shanghai, the southern provinces of Guangdong and Fujian and in the central and eastern regions of Zhejiang, Shandong and Henan, state media reports said.

"In recent days the demand and supply situation for oil products has been tight," the People's Daily website quoted a PetroChina official from Henan province as saying.

"The main reason is that international oil prices have reached record highs while domestic prices have not followed suit. This has seriously influenced the production activities of refiners."

With government subsidies keeping fuel prices artificially low, petrol stations are either running out of supplies or are shutting operations hoping for a state-approved rise, he said.

Price controls in China often result in oil being cheaper domestically than internationally, a situation that is especially exacerbated with large upward swings on the global market.

World oil prices surged to historic highs Friday, breaching 92 dollars a barrel for the first time in New York following a week of price surges.

According to Shanghai's Xinmin Evening News Sunday, numerous petrol stations along the major Shanghai-Hangzhou highway were jammed with vehicles after they had run out of supplies of diesel.

The report also said people hoping to depart the city for weekend outings had difficulty finding petrol stations selling supplies Sunday morning.

In some parts of the country, commuters were being limited to purchases of only 100 yuan (13 dollars) of petrol, or were forced to buy premium fuel due to shortages of low-octane petrol, various reports said.

Truckers were also finding it difficult to tank up with diesel at a time when seasonal demand was expected to rise due to the ongoing harvest season.

Demand for energy in China, the world's second-largest oil importer, has rocketed as a result of explosive economic growth that has been in double digits for four consecutive years.

Imports last year accounted for 47 percent of the country's overall consumption, and industry observers have warned imports might make up more than 50 percent of its petroleum needs in a year or two.

During the first eight months of the year, China's net imports of crude oil rose 18.1 percent over the same period last year.

Chinese demand has been identified as at least partly responsible for currently high oil prices.

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