CRI听力:Private Owned Gas Stations Reduce Gas Price

Although the government's price for processed oil has increased, many privately owned gas stations haven't increased their retail price. Yang Delong, chief analyst at China Southern Fund, explains why.

"The financial losses announced by Sinopec and PetroChina are calculated based on the present high international crude oil price. In fact, the oil in stock has been bought at a relatively low price in the past. Therefore, privately owned gas stations have reduced their prices based on volume, which is a common sales promotion method."

In addition, some refining and chemical companies have set lower ex-factory prices for gasoline and diesel. Shandong Changyi Petrochemical Corporation is the largest local refining and chemical company. At present, its ex-factory wholesale price for 93-octane gasoline is 9,220 yuan per ton, 230 yuan lower than the pricing guidelines set by the National Development and Reform Commission. Jiang Hui is manager of the company's Sales Department.

"Our ex-factory price is lower than those of Sinopec and PetroChina. The price difference is caused by the brand recognition, although we produce products of the same quality. Only if we sold gasoline at a lower price would privately owned petrol companies and gas stations likely buy it from us."

Jiang also says lower price complies with the tumble in the global crude oil market in past five weeks. Industry insiders point out that local petrochemical companies have to transform crude oil into processed products and get rid of their stock as soon as possible to reduce losses caused by price differences.

Professor Dong Xiucheng from the China University of Petroleum says the price decrease as well as the diesel shortage, which occur every year, are caused by the government's pricing system.

"The main problem is the long period of price adjustment, because it causes hoarding and waves of selling. These make the market unstable and unhealthy."

According to the current regulations, the price of domestically processed oil will be adjusted when the international crude oil price fluctuates by 4 percent on average during 22 consecutive working days. He suggests making more frequent adjustment along with the changes in the international market.

For CRI, I'm Wang Xiao.