12-22-2010 13:57 BJT
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China's national planner says the decision to increase gasoline, diesel and kerosene prices was taken after "careful consideration" of the rapid increase in overall prices in China. The National Development and Reform Commission or NDRC says the hike in oil prices will only add 7 basis points to the monthly consumer price index.
Crude oil prices in the international markets this month reached their highest since October 2008. But in China, the government maintained oil prices and limited its scale.
Experts say domestic oil consumption is soaring and China's reliance on foreign countries for the commodity has reached to 55 percent. Now, a grim situation faces the country's oil supply.
Professor Zhou Dadi, Energy Research Inst. of NDRC, said, "International oil prices have been going up for a long time. It has been just above 80 US dollars per barrel. It now stands at 88 dollars. The widening price gap has caused a domestic diesel shortage."
Experts say the decision to allow price hike in China was prompted by increasing demand. And its impact will be limited on overall inflation.
Prof. Zhou said, "Oil prices account for a tiny portion of the CPI index. So for most people, I believe the impact of the oil price hike will be limited."
The NDRC says it will introduce measures so that the hike in oil prices do not affect the public, railway and air transportation sectors.
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