Top Biz News

Domestic gas companies 'forced' to slash prices in Beijing

By Shen Jingting (China Daily)
Updated: 2010-03-09 10:43

Domestic gas companies 'forced' to slash prices in Beijing

Gas stations in Beijing lower their prices to compete with each other. [Wu Changqing / for China Daily]

State-owned gasoline stations are offering price cuts on 93 octane gasoline in downtown Beijing, in alleged response to fierce market competition from private and foreign-funded gas stations.

Sinopec, Beijing's largest gas station operator, has lowered the price of the popular fuel by 0.4 yuan (6 cents) per liter at its Beijing railway station and Chongwenmen branches, both located inside the Second Ring Road. The promotion runs from 9 pm to 7 am daily.

The company had already cut prices of 93 octane gasoline by between 0.2 and 0.4 yuan per liter at some 27 stations outside the Fourth Ring Road last November. This is a fraction of the 500 Sinopec gas stations that exist in Beijing alone, with the bulk situated in downtown areas.

On Nov 10 last year, the National Development and Reform Commission raised the wholesale price of gasoline and diesel by 480 yuan per ton. It pushed the benchmark price of 93 octane gasoline in Beijing to 6.66 yuan per liter, the highest in history. The Sinopec cut now drops this figure to 6.26 yuan per liter.

Insiders said the move was stimulated by similar cuts from private and foreign-funded oil companies, such as Shell and TOTAL. These foreign brands already offer even bigger slashes of 0.4 yuan to 0.66 yuan per liter, which can be found at all their Beijing branches.

"The intense competition has forced domestic oil giants to lower their rates, because supply is much bigger than demand," Han Xiaoping, CEO of China Energy Net, told Beijing Evening News.

"Sinopec's gas stations have boasted a monopoly position within the Second Ring Road, but now it has to offer promotions because drivers have realized they can just journey out to Fourth Ring Road stations," Han added.

Liu Yao, spokesman for Sinopec Beijing, said their cuts were normal business promotion and not a response to market competition.

"We launched the promotion right after the Spring Festival and it has achieved good results so far," Liu told METRO. Zhang Guangfang, a worker from Sinopec's Beijing railway station branch, described the effect of the recent cut.

"We have seen more drivers in our station during the evenings," Zhang said.

A second domestic oil giant, PetroChina, also lowered its prices by 0.2 yuan per liter in stations within the Second Ring Road.

Liu Huang, 37, a Beijing taxi driver, welcomed the discount. He said he drives over 200 kilometers every day, and estimates the promotion can save him up to 200 yuan each month.

"Originally, I only heard that Sinopec was offering cheaper oil outside the Fourth Ring Road. The fact that it has now expanded to inner Beijing makes my life much more convenient," Liu said.