China raises fuel prices, considers pricing reform

China will raise retail gasoline and diesel fuel prices by RMB230 (US$34.54) and RMB220 per metric ton, respectively, Dow Jones reported, citing an announcement on the National Development and Reform Commission’s website. The increase represents a hike of approximately 3% from current average retail prices. Domestic crude oil prices will remain below average international levels. The adjustment is the country’s first in over four months. The NDRC is also expected to announce a new, more transparent pricing mechanism. The current mechanism allows domestic fuel prices to be adjusted any time crude oil prices change by more than 4% over a 22-working day period, and includes a clause guaranteeing refiners a 5% profit margin. In related news, state media reported that the People’s Congress Standing Committee is drafting a law that will tax vehicles based on engine capacity while reducing taxes on clean energy vehicles.