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China faces diesel, gasoline shortages

By OGJ editors
HOUSTON, Mar. 28 -- China is facing shortages of diesel and gasoline as the gap widens between rising international crude prices and centrally controlled fuel markets.

Shortages first reported in southern and inland China apparently are spreading to the wealthier areas in the north and east as filling stations struggle to obtain fuel shipments from refiners.

In Beijing, workers at 20 retail outlets said they were either rationing or had run out of diesel because of shortages. Four outlets in Shanghai said their daily diesel shipments had not arrived. Staff at another outlet said they were on duty all day and night, waiting for diesel shipments.

Shanghai authorities played down the shortages and urged drivers not to hoard fuel. The municipal economic commission said the city has enough diesel to last 10 days. Shanghai and other major cities experienced brief shortages in the second half of last year, but those shortfalls disappeared after the government ordered oil companies to ensure supplies and then raised fuel prices by about 10%. Now with inflation at its highest level in a dozen years, Chinese officials are resisting pressure from refiners for price increases.

After decades of supplying its own energy needs, China became a net importer in the 1990s as its economy boomed. Imports rose 12.3% last year to 1.1 billion bbl, and they now supply nearly half of China's demand.

With crude priced close to or above $100/bbl on the world market, independent refiners have reduced or stopped production. Under orders to ensure supplies to major cities and key sectors such as farming and public transport, state-owned major oil companies such as Sinopec and PetroChina reportedly limited sales to independent gas stations in some regions.

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