Move targets profiteering by producers, wholesalers, retailers Beijing has ordered a crackdown on illegal price increases for oil products as surging world costs offer opportunities for profiteering. The powerful National Development and Reform Commission, which oversees pricing, had launched an immediate inspection of oil product prices - including petrol, diesel and liquefied petroleum gas - it announced yesterday on its website. In a vestige of state planning, the central government sets energy prices, which remain lower than world levels because of its concerns that linking directly to the market could cause inflation and spark social unrest. 'We must increase penalties strictly, and promptly and effectively crack down on all types of illegal pricing,' the commission statement said. The move comes after the government raised fuel prices for the first time in nearly a year late last month. Ex-factory petrol prices rose by 5 per cent from March 26, while diesel prices rose 3 per cent. The statement said some localities and companies had engaged in illegal acts such as raising prices before being allowed, adding extra fees, falsely raising grades of products and covertly increasing prices. 'Each time the government wants to adjust prices, some people or companies take the liberty to change prices in advance or hoard stock, both of which are illegal,' said Hou Jixiong , an oil analyst for Guotai Junan Securities in Beijing. 'This time, the new pricing scheme will face resistance as it could affect the interests of some people.' The inspection would cover producers, wholesalers and retailers, with the aim of preserving 'normal market order' and protecting 'the basic interests of the masses'. Taxi drivers in several cities have already complained that rising fuel prices have increased their costs and made it harder to earn a living. The government is also subsidising farmers and urban transport companies to lessen the impact. Analysts said sellers had been tempted to raise prices beyond the government-set limits because of the high cost on the world market. 'They use the international prices as a reference. If they sell at such low domestic prices, they are losing money,' said another analyst, who declined to be named. Top oil firms such as Sinopec and PetroChina have complained the pricing system is hurting their business. When world prices rise, some refiners cut supplies to independent operators to supply their own networks, causing shortages and giving an incentive for domestic prices to rise, analysts say. The system also encourages refiners to produce higher grades of petrol and gas, which sell for higher prices. Such strategies resulted in shortages of certain lower grades of petrol last summer. In some parts of the mainland that depend largely on imported LPG, prices have to be higher simply to cover import costs.