BEIJING - CHINA cut retail prices for gasoline and diesel on Thursday and raised fuel taxes in an overhaul of its system of state-controlled energy prices.
The pump price of diesel will fall by 18 percent while the gasoline price is cut by 13.8 per cent, effective on Friday, according to the country's planning agency, the Cabinet's National Development and Reform Commission.
The price cut reflects a decline in global oil prices and the government's desire to reform its pricing system, the agency said in a written statement.
Oil prices fell to 4 1/2-year lows on Thursday in Asian electronic trading on the New York Mercantile Exchange, with the January contract sinking as low as US$39.19 (S$56.13) a barrel - down sharply from a peak of nearly US$150 a barrel in mid-July.
Beijing shielded the Chinese public by restraining fuel price increases, forcing state-owned oil companies to absorb losses as global crude costs soared. Prices were gradually raised to reflect crude costs but Beijing worried about the impact on the poor.
At the same time, the government is raising fuel taxes and canceling some road-use and vehicle fees, the agency said. But the taxes are small compared to the price cut, so consumers will still see signficant savings.
The agency's chairman, Zhang Ping, said earlier that the change is meant to more accurately reflect road use by requiring those who drive more to pay higher taxes while giving a break to those who drive less. -- AP
