Trucking disrupted in china

Discussion in 'Economics' started by alientrader, Nov 1, 2007.


    China Rationing Diesel Amid Shortages
    Tuesday October 30, 11:33 pm ET
    By Joe Mcdonald, AP Business Writer
    China Rationing Diesel Amid Shortages Blamed on Price Controls

    BEIJING (AP) -- Frustrated truck drivers lined up to buy as little as a quarter of a tank of diesel Tuesday because of shortages that one Chinese oil company blamed on a shortage of refining capacity due to price controls.

    The shortages disrupted trucking in Shanghai and the export-driven provinces of Guangdong, Zhejiang and Fujian in the southeast, but the possible economic impact was unclear.

    The Zhengda Transportation Co. in Guangzhou, China's southern business capital, now needs a week to get goods to Beijing instead of the usual three days as drivers hunt for fuel, said a manager who would give only his surname, Liu.

    "We have to drive further to find another filling station," Liu said. "Many goods are delayed in delivery."'

    Oil refiners are losing money because of price controls that block them from passing on soaring crude costs to consumers, and they have refrained from investing in expanding refining capacity.

    "Domestic oil refiners already have suffered great losses, so they are greatly reducing production, even suspending it," said a statement by a provincial branch of China's biggest oil company, China National Petroleum Corp., according to the official Xinhua News Agency.

    The communist government sets diesel and gasoline prices and has held them steady as crude prices climbed. The price of light, sweet crude for December delivery on the New York Mercantile Exchange hit a record high of $93.80 on Monday but fell back slightly on Tuesday.

    Authorities have rejected appeals from oil companies to raise prices, saying they want to avoid hurting China's poor, who already have endured sharp rises in food costs this year.

    It was unclear how the shortages would affect key export industries.

    "If it's temporary, then it will be nothing, but if it lasts for six months, then that will be a big problem," said Lehman Bros. economist Mingchun Sun in Hong Kong. "The issue is that we don't know how severe it is or how widespread."

    Filling stations in Guangzhou appeared to be short of gasoline, though the extent of the problem was unclear.

    At one station, employees blocked the entrance at evening rush hour with a sign that said, "Temporarily out of gas." They told a driver to return early the next morning. A clerk who refused to give her name said the station had been short of gasoline for two days.

    "Usually I would buy the cheapest grade of fuel, but now I'll buy whatever they have," said a Guangzhou taxi driver who would give only his surname, Yang. "I'm just glad I don't need to use diesel. They never have that anymore."

    In Shanghai, some stations limited customers to a quarter-tank, newspapers said.

    "I have no idea when the situation will return to normal. We're not getting any supplies from our company," said an employee at a Sinopec Qibao gas station on Shanghai's west side. She gave only her surname, Dong.

    China has become the world's second-largest oil consumer after the United States. Explosive growth in export industries and private car ownership are driving demand for fuel.

    Businesses and some Chinese commentators accused CNPC and China's other major oil company, China Petroleum & Chemical Corp., or Sinopec, of creating phony shortages to force Beijing to raise prices.

    Phone calls Tuesday to the press offices of CNPC and Sinopec in Beijing seeking a response to the accusations were not answered.

    Associated Press Writers Cassie Biggs in Hong Kong, Elaine Kurtenbach in Shanghai and William Foreman in Guangzhou contributed to this report.