Big cities run short of petrol and diesel

Drivers urged to stay calm and not hoard fuel as long queues form at filling stations
Associated Press, 25 Mar 08

SHANGHAI - CHINA'S leaders are facing renewed pressure over shortfalls in diesel and petrol, with lines growing at filling stations in major cities yesterday.

The shortages, first reported in southern and inland China, appeared to be spreading to the wealthier coastal areas as filling stations struggled to get shipments from refiners.

Four stations contacted yesterday in Shanghai said their daily diesel shipments had not yet arrived. 'You could try your luck later in the day. Now we have no diesel available at all,' said a filling station attendant in the city's eastern Pudong district.

The authorities downplayed the shortages and urged drivers to remain calm and not hoard fuel. Shanghai, China's commercial centre and a key trade transportation hub, has enough diesel to last more than 10 days, the city's Economic Commission said in a statement yesterday.

'Prices are set by the government, so consumers should not panic over fears of surging prices or try to stockpile fuel,' it said.

Shortages in the second half of last year briefly affected Shanghai and other major cities. But those shortfalls disappeared after the government ordered oil companies to ensure supplies, and then raised fuel prices by about 10 per cent.

Now, as the gap widens between international crude oil values and centrally controlled fuel prices and with inflation at its highest level in a dozen years, China's economic planners are resisting pressure from refiners for price hikes.

The consumer price index saw an 8.7 per cent jump in February over a year earlier, prompting Premier Wen Jiabao to vow more stringent controls to help rein in inflation.

China supplied its own energy needs for decades from domestic oilfields but became a net importer in the 1990s as its economy boomed.

Imports, which now cater for nearly half of demand, rose 12.3 per cent last year to 1.1 billion barrels. With crude prices at over US$100 (S$139) a barrel, independent refiners have cut back or stopped production.

Major state-owned suppliers Sinopec and PetroChina have been ordered by the government to ensure supplies to major cities and key sectors such as farming and public transport.