China shocked the world oil markets with its first price hike since November this week -- raising the possibility of a slow-down in Chinese demand growth for the first time this year. The timing of the news (ahead of the Olympics, not after) and the size of the increase (a relatively hefty 17% gain) were eye-popping. But in retrospect, was the news really worth all the fuss?
Retail gasoline and gasoil prices in Beijing are among the lowest in Asia, even after the bold and unexpected hike in China's government-controlled rates.
A survey of pump prices done by the team across 12 major Asian capitals, led by our senior Asia news director, Vandana Hari, showed Beijing in the bottom quartile -- along with serial subsidizers Kuala Lumpur and Jakarta. Its regular unleaded gasoline retails at Yuan 5.80/liter (about $0.84/liter) and diesel at Yuan 6.23/l ($0.91/l) in the Chinese capital since Friday.
Amid such company, it is clear that there is a very long way to go before the average car driver in China feels the sort of pinch that has finally started to cause America's determined motorists to change their lifestyles.
The cheapest city to tank up in Asia remains Jakarta, where regular gasoline sells for Rupiah 6,000/liter ($0.65/l) and gasoil for Rupiah 5,500/l ($0.59/l), after the government raised fuel prices by an average 28.7% on May 24 in a bid to shake off some of its growing subsidy burden.
The governments in Indonesia, India, Sri Lanka, Malaysia and Taiwan successively buckled over the past weeks in slashing fuel subsidies as benchmark crude remained stubbornly over $135/b, but China was the last to cave in.
Industry wisdom had it that the country would stand still until the Beijing Olympics were over. It might be that the surprise was bigger than the news -- last week's announcement was the first time that a price increase has been announced without even a whisper making it to the sources we talk to first.
HOW THEY RANK
The following list compares current average gasoline and gasoil prices in US$/liter in 12 major Asian cities, arranged in descending order. Gasoline prices are for the lowest RON grade available in the city and gasoil prices reflect the regular fuel, not biodiesel. The "market" and "subsidized" tags refer to retailers being free to adjust pump prices in accordance with world market movements and the government subsidizing fuel prices.
City Gasoline Gasoil Last Hike Pricing
Seoul 1.85 1.86 2-Jun-08 Market
Tokyo 1.60 1.42 16-Jun-08 Market
Singapore 1.58 1.35 23-May-08 Market
Colombo 1.46 1.02 25-May-08 Subsidized
Bangkok 1.22 1.24 15-Jun-08 Market
Manila 1.28 1.12 18-Jun-08 Market
New Delhi 1.18 0.80 16-Jun-08 Subsidized
Taipei 1.11 1.04 28-May-08 Subsidized
Hanoi 0.89 0.85 28-Feb-08 Subsidized
Beijing 0.84 0.91 20-Jun-08 Subsidized
KL 0.80 0.79 5-Jun-08 Subsidized
Jakarta 0.65 0.59 24-May-08 Subsidized
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