Wednesday, November 21, 2007

Oil price rise sparks mixed reaction

BIZCHINA / Weekly Roundup

 Oil price rise sparks mixed reaction
By Liu Weifeng , Zhou Weirong and Zhan Lisheng (China Daily)
Updated: 2006-03-28 05:40

There has been mixed reaction from taxi companies and drivers to the
latest oil price rise, which took effect nationwide on Sunday.

In Beijing, retail prices will rise by 460 yuan (US$58) per ton for
gasoline and 340 yuan (US$43) per ton for diesel both the highest
national price rises compared with an average 250 yuan (US$30.8) and 150
yuan (US$18.5) respectively.

A Chinese worker changes a price tag of the oil price board at a gas
station in China's capital Beijing March 26, 2006. China will raise
retail diesel and gasoline prices for the first time in eight months this
weekend, but the 3-5 percent increase will leave refiners in the red and
do little to deter fuel demand. [Reuters]

Taxi drivers have called for government subsidies to offset losses.

"I hope and believe the government will subsidize our daily losses caused
by the rising fuel cost," said Wang Chunwang, 53, an experienced cab
driver of Shunfa Taxi Co.

Driving more than 400 kilometres every day, Wang's 2.0 litre emission
Hyundai-Sonata is fuelled by about 32 litres of 93-octane grade petrol,
which has risen to 4.65 yuan (58 US cents) a litre from 4.26 yuan (53 US

This leaves Wang short by 13 yuan (US$1.6) a day.

According to local media reports, a taxi price hearing is imminent on the
re-adjustment of taxi charges per kilometre .

But officials from the Beijing Municipal Development and Reform
Commission told China Daily that a taxi price hearing is not on their
immediate working list.

Wang, who has been driving cabs for 13 years, warns that raising the unit
price levied on passengers is not the best way to offset the losses
because "a rise in prices means a fall in customers."

"I think government subsidy is a better option," he said.

Since last July, Beijing cab drivers have received a monthly 400-yuan
(US$50) government subsidy to combat the rise in gasoline prices.

Others are less affected by the price rise. Zou Gang, who manages a local
driver-training school and owns about 100 vehicles, said the gasoline
price rise stings the profit margin, but the school can still make a

According to an ordinary motorist, the price rise will not have a serious
affect on his daily life.

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