China Hikes Domestic Fuel Prices

By Katie Hayes
Han Zhi, 32, from An Hui Province, owns his own truck and pulls loads from Shangai to Chong Qing. The increase in gas prices will cost him roughly 2,000 yuan more for diesel each trip.
Click image to magnify

Ms. Shen and her husband, truckdrivers from Shandon province, plan to cut cost by skipping dinner while on the high road.

A day after I wrote my blog about the fuel shortages caused by China’s artificially low state-controlled prices, the government raised the price of diesel by 18 percent, the equivalent of $3.83 a gallon. Gasoline prices were raised 16 percent to $3.58 a gallon, as reported by the New York Times and China’s official Xinhua News Agency.

The Chinese price hike also rocked global markets, causing the price of oil to fall $4 a barrel. Some analysts are predicting inflation will rise in China too.

On Friday, the day following the price hike, I asked roughly a dozen Chinese truckers how the increase would affect them. Drivers who own their own trucks and buy their own diesel predicted their income would take a big hit. One independent trucker told me that in the next month, the new prices would cost him 2,000 yuan, just under $300, which is nearly 20 percent of his gross monthly income.

It remains to be seen the extent to which the higher deisel costs will put upward pressure on the price of Chinese exports to the U.S.

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