国内英语新闻:China cracks down on diesel overcharging amid shortage

As a result, some provinces, under the pressure to meet the requirements, took emergency measures, such as limiting power supplies so as to cut energy consumption. This has pushed up the demand for diesel as factories turned to the fuel for power.

"Many places cut power supplies, forcing factories to use diesel to generate power and this contributed to the abrupt diesel demand," said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.

Wang Zhen, head of the Business Administration College of China University of Petroleum, said two major factors which contributed to the shortages included abrupt demand amid economic recovery and diesel supply strain due to "emergency" power cuts.

In Xinglong, a county with about 300,000 residents in north China's Hebei Province, the power quota available was 89 million kilowatts per month throughout July and August. This was due to energy-saving and emission-cut requirements.

The quota dropped to 66 million kilowatts in October, forcing 46 plants to close. They reopened in November as the monthly quota rose to 70 million kilowatts. Many plants had to turn to diesel for power to continue production.

The. second round of quantitative easing monetary policy by the U.S. also pushed up commodity prices. China raised oil prices on Oct. 26 to narrow the gap with international levels, but expectations were not relieved on further rises of domestic oil prices, resulting in hoarding for profits.

Finally, China's oil price-fixing mechanism also contributed to the severe shortages this time, experts said.

According to the mechanism, which was updated in 2009, domestic oil prices can change after the international crude prices rise or fall more than 4 percent in 22 working days.

Thus, domestic oil prices changed far behind international prices and the time lag may have encouraged arbitrage activities, Lin said.

Lin said China needs to further update the oil-price fixing mechanism to provide full play for prices in the market.

To relieve the domestic diesel shortages, both Sinopec and PetroChina, China's two oil giants, are increasing diesel imports.

Sinopec said on November 19 that it had even suspended diesel exports.