'Brother Fuel Price' speaks for consumers

PUBLISHED : Saturday, 07 April, 2012, 12:00am
UPDATED : Saturday, 07 April, 2012, 12:00am


The latest increase in the mainland's heavily regulated petrol prices has thrust a Zhejiang university student into the national spotlight.

Asked by a television reporter doing street interviews in Jiaxing how he felt about the 6 per cent rise, he replied: 'Can I use nasty words?'

Told he could not, he said that in that case he had nothing to say and walked off.

He didn't seem like the joking type.

His succinct response after Beijing increased the prices of refined oil products for the second time this year on March 20 was applauded by mainland internet users, who dubbed him 'Brother Fuel Price'.

The mainland's top economic planning agency, the National Development and Reform Commission, has a tight grip on fuel prices as part of efforts to control inflation.

The existing pricing mechanism, under the direct control of the central government, is based on global crude oil prices. A 4 per cent price movement, in either direction, within 22 working days, will trigger an adjustment.

But a wild swing in crude prices within any given 22-day period can make it difficult for Beijing to adjust domestic retail prices for refined oil products, with the authorities concerned that big price increases will spark public uproar.

Mainland car owners would be upset even though the price increase was in line with higher global crude oil prices.

Petrol consumers, mostly car drivers, would set their sights once again on the mainland's three oil giants - PetroChina, Sinopec and CNOOC - whose rigid bureaucracies and lavish spending are often blamed for sky-high fuel prices.

Petrol prices on the mainland are about 20 per cent higher than those in the United States.

Government researchers have offered many reasons for the price increases, including the mainland's cumbersome tax system and an inefficient production system that forces refiners to maintain large payrolls.

But consumers see the oil juggernauts as unfettered predators robbing them of their money.

According to a research report published jointly last month by the China Petroleum Enterprise Association and the China University of Petroleum, the three oil companies, which enjoy a cosy oligopoly over the massive mainland market, posted a combined net profit of 332.7 billion yuan [HK$409 billion] last year, or 911 million yuan a day.

PetroChina, the largest of the three oil companies, has been the most profitable firm in Asia for the past few years.

Prices of refined oil products have more than doubled since 2005.

Sinopec's Guangdong branch was exposed last year for shelling out 1.6 million yuan to buy Maotai, a fiery liquor often used by top government officials to toast foreign guests at state banquets, and imported wine for entertainment activities.

The scandal eventually led to the replacement of Sinopec's Guangdong chief executive, Lu Guangyu.

Other oil giants are believed to have similarly lavish entertainment expenses.When mainland motorists hear about another fuel price rise they mutter about 'paying extra money for them to buy more Maotai'.

It's no wonder that Brother Fuel Price's comments hit home.