China may tweak oil price-setting formula
(Reuters)
Updated: 2005-08-21 08:59

It implied, though did not say so explicitly, that more frequent monitoring would lead to more frequent price adjustments that would benefit oil giants such as Sinopec and PetroChina .

A taxi driver pushes his car forward while queuing for business before a shopping mall in Zhengzhou, capital of Central China's Henan Province, July 30, 2005. [newsphoto]

"This will, to a certain extent, ease the pressure that state oil companies are currently facing," the paper said, adding the new formula would also make companies more aware of the need to uphold national energy security.

HOARDING

Analysts say more frequent price adjustments would reduce the incentive to hoard fuel, one factor behind recent shortages.

The official Xinhua news agency has blamed the shortages on typhoons that disrupted shipments and floods near refineries in China's northeast. But it has also noted hoarding.

China has been opening its planned economy for more than 20 years, but is reluctant to cede control of energy prices.

China's economic boom also needs cheap oil.

But global oil markets have surged more than 50 percent so far this year. With China's product prices up just 15 percent in the same period, industry losses mounted to a net 4.19 billion yuan ($517.3 million) in the first half.