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Post-Olympic energy-price adjustment up-in-the-air

By Du Xiaoli (chinadaily.com.cn)
Updated: 2008-08-20 08:32

Price trends for coal, power and oil after the Olympics will depend on many factors, including the overall economic development situation of the country, domestic and overseas energy status and supply and demand of the market, the Shanghai Securities News reported, citing Zhang Guobao, administrator of the National Energy Administration (NEA).

"Prices often reflect product supply and demand. Now China is gradually transitioning from a government-controlled price system to a market price system," Zhang said.

As for fuel prices, China is gradually going toward international prices, Zhang said. The adjustment of gasoline, diesel oil and aviation kerosene prices on June 19 was decided after consideration of the domestic situation. The prices were still lower than international prices after the adjustment.

The diesel oil supply strain and queuing up at the gas pump has eased, especially for the gasoline supply, Zhang said.

The current power supply strain in some provinces is not caused by an insufficient power capacity but by the coal supply strain, according to Zhang. The power industry has developed too rapidly in for the coal supply. Meanwhile, other coal-consuming industries, such as the steel industry, also witnessed a rapid demand increase for coal.

Big cities like Beijing and Shanghai didn't experience a power shortage, Zhang said. China's coal prices are determined by the market and the country established a leading group for the coordination of coal, power, oil and transportation to improve the situation of the coal supply strain and price increase via a series of measures, including increasing coal output and supply, energy saving and managing the demand for power.

Power prices cannot be determined by the market completely, Zhang said. China, just like most countries in the world, implements a government pricing method in order to control price increases and satisfy people's need for power.