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Last Updated: Friday, 5 August 2005, 12:43 GMT 13:43 UK
S China drivers face fuel famine
A Sinopec petrol tanker
Oil refiners prefer to make higher-grade petrols many drivers cannot afford
Petrol shortages are developing in Guangdong Province, the industrial belt that produces one third of China's manufacturing exports.

Drivers are reportedly having to queue for rationed petrol and shortages are hurting petrol station profits.

Refiners are also limiting output of some fuels in the face of soaring crude oil prices and domestic price caps, the official China Daily reported.

But there is no sign of export truck traffic grinding to a halt.

Shortages appear to involve the cheapest grades of petrol, which are being phased out by refiners as unprofitable, Reuters news agency reported.

Cheap petrol vanishes

"I've seen business drop by around one third since I stopped being able to get 90 gasoline," a Guangdong petrol station manager called Liang told Reuters news agency. Ninety gasoline is a popular budget option.

How can we make a living like this?
Guangzhou taxi driver

Taxi drivers are suffering too. "You can barely find 90 anywhere", said driver Xiao Weisong. "How can we make a living like this?"

The problem appears to be limited to Guangdong Province, home to the Guangzhou and Dongguan manufacturing hubs.

Guangzhou, the province's capital city, has a monthly shortfall of 50,000 tons of refined oil, China Daily quoted the secretary of the Guangzhou Petrol Retailers Association, Xie Zhaowei, as saying.

But in Shanghai there is enough supply to meet demand, according to a local marketing official of the China Petroleum and Chemical Corporation.

Global crude oil prices have soared in recent months, setting a new record of $62.50 a barrel in New York trade earlier this week.

Rapidly industrialising China's demand for oil is growing faster than output from domestic oil fields - one factor behind the recent failed attempt by China National Offshore Oil Corporation to buy mid-sized US oil firm Unocal.

"Asia's largest oil refiner Sinopec relies on imports for much of its crude refining oil," oil analyst Han Xuegong told China Daily.

Mr Han is a senior analyst at China National Petroleum Corp, another state-controlled oil group.

"Surging crude prices have greatly hurt (Sinopec's) refining business when central government controls the price of oil to stabilise the market," he said.

China's authorities face a dilemma as petrol prices are capped partly to prevent social unrest by buffering creaking state enterprises and small private firms from market forces.

The summer storm season is also disrupting supplies. China's coastal provinces are bracing themselves for Typhoon Matsa, and 20 provinces have suffered torrential rain in recent days.

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