To Stem Shortages, China Allows Oil and Electricity Prices to Rise
The Chinese government has finally allowed oil and electricity prices to rise to cope with both an oil shortage that is spreading across the country and with the accumulating losses of the energy industry, and to guarantee a steady energy supply this summer, especially during the Olympic Games in Beijing this August.
Sinopec Losses Widening Under Fuel Price Controls
While profits pile up for the world's petroleum firms with the continuing rise in the international price for crude oil, what's piling up for Chinese oil giant Sinopec is losses, thanks to the gap between what it has to pay for the stuff and what it can charge in its home markets, over neither of which it has any control. The market takes care of the first, and the Chinese government shows no sign of letting go of the second.
Easing Up on Fuel Price Controls Not Possible in 2008
International crude oil now trades for over $130 per barrel, but China's domestic oil product prices are still under strict government control. It has been recently hinted that Beijing would soon ease up a bit, but the government has quickly quashed that rumor. Sichuan's earthquake and a high inflation rate combine to make oil product price reform almost impossible this year.
Earthquake Hits CNPC and Exacerbates China's Diesel Shortage
The earthquake in Wenchuan, Sichuan Province has affected the operations of the China National Petroleum Corporation (CNPC), the parent company of PetroChina. According to preliminary estimates, losses due to the earthquake reached 1.78 billion Yuan. PetroChina is now making every effort necessary to rescue wounded staff and find employees that are still missing, while ensuring the supply of oil and the safe operation of facilities in earthquake affected areas.
Sino-Japan Energy Cooperation Inspired by East China Sea Dispute Settlement Prospect
International crude oil prices have risen to $122 per barrel, and the dispute over oil and gas fields in the East China Sea is a distinct obstacle on the road to any Sino-Japanese harmony. Chinese President Hu Jintao's is using his present visit to Japan as an opportunity to push towards a resolution of the problem and promote energy cooperation between the two nations.
Blackouts Threaten without Power Plants Price/Cost Relief
The government's attempt to rein in inflation by controlling prices is reaping further whirlwinds. The recent troubles of China's oil industry, which is barred from raising its pump charges to offset soaring international crude oil prices, are now being visited upon the domestic power industry. Costs are rocketing but their prices cannot match them.
PetroChina Valuation at the Mercy of the Government
It doesn't seem possible, at a time of soaring crude oil prices, that PetroChina, China's largest company, would have its investors wondering if they were living in a dream, and a very bad one at that. The situation is so unreal that it has even Berkshire Hathaway's Warren Buffett and Quanta's Jim Rogers, the world's two top investors, coming down on different sides of the question of just what the company's shares are worth.
China's Power Plants Struggling under Coal Supply Crisis
China's electricity and power supply is once again on the verge of a crisis. As of April 20th, the national stockpile of coal for power generation was a mere 46.69 million ton, which is enough to supply the country for 12 days, yet in March there was enough coal stockpiled to supply the country for 15 days.
Diesel Shortage Slams China's Deep South Yet Again
Oh, same old, same old. International oil prices rise, government-controlled prices don't, and oil shortages proliferate across the Chinese landscape. In recent years this has become the refrain for China's oil products market. Prices exceeded $115 a barrel last week, and a shortage of diesel fuel has hit southern China's Guangdong Province. The latest previous diesel shortage occurred less than a month ago.
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