Police called to keep order at petrol stations Worried about inflation and the threat of social unrest, the mainland has tried to take the sting out of sharply higher energy prices through exemptions, but motorists were complaining yesterday as they were hit by higher costs at the pump. 'Prices are too high. I won't be able to afford it if prices keep rising,' said one driver, who just spent 240,000 yuan (HK$272,783) on a new car, as he waited in line at a petrol station in Shanghai. The government said late on Thursday it was raising petrol, diesel and jet fuel prices. It will offer subsidies to the agriculture, fishing and forestry industries as well as transport and taxi companies, the National Development and Reform Commission (NDRC) said. From July, low-income urban and rural residents will receive cash subsidies to ease the pain. The government has pledged to keep transport prices stable as well. The government will also raise electricity tariffs from July 1, but household electricity use and those involved in agriculture or fertiliser production will be exempt. However, some residents still worry their finances will be stretched, with inflation running at 7.7 per cent in May, though down from a 12-year high of 8.7 per cent in February. 'I'm concerned about whether the prices of daily necessities will also go up following oil prices. If so, it will affect my life much more,' said Zhou Yong, an electric company worker. Analysts speculate that one of the reasons the government delayed the increase in energy prices for months, despite rises in world prices, was worries over the impact on social stability. Inflation was among the grievances that fuelled the 1989 pro-democracy protests. Beijing especially does not want social unrest in an Olympic year. Across the country, police had to be called to keep order at service stations, as long lines formed after the news spread on Thursday evening. 'There was a long line. There were more than 10 cars in front of every pump. The police came to keep order,' said an attendant at a petrol station in Shanghai. To keep inflation in check, the NDRC exempted major public transport systems including railways, buses and taxis from the increases, and promised to continue to subsidise the services. However, taxi driver associations in Guangzhou and Shenzhen complained yesterday that their members were squeezed by the price increases because the lean subsidies did not cover the added costs. The mainland spent 220 billion yuan, or 0.9 per cent of its annual gross domestic product, on fuel subsidises last year and the amount could reach about 500 billion yuan if Beijing keeps freezing retail fuel prices. The central government has pledged to pay the subsidies promptly, but for taxi driver Chen Tongqiang it cannot come soon enough. 'I really hope our government can take better measures to protect our interests. I would rather they give us financial assistance because our number of customers would fall if fares rise,' he said. The government has already ruled out raising taxi fares. Some consumers said the rise would not change their driving habits or deter them from buying cars, since fuel prices were still lower than international levels and a fraction of the total cost of buying a car - the dream of the nation's middle class. In the glossy showroom of Motortri Trading in Shanghai, which sells Lamborghini, the Italian sports car, buyers were still interested. 'It won't affect our car sales, as we are a luxury brand. Our buyers usually own several cars and drive them for fun instead of work, so they never worry about the fuel price,' a dealer said.
