China Environmental Law

Correction: Has hell frozen over?  CELB has made an error.  We have just emerged from a strenuous self-criticism session, and have agreed to forgo this afternoon’s fourth Diet Coke.  In addition, we have been forced to correct our boo boo below.  We are not entirely to blame.  The Economic Observer Online (EOO) made a typographical error when it reported the new price of Grade 93 gasoline in Beijing after the recent price hikes.  EOO reported 3.67 yuan/liter; the correct price (as we noted on our recent trip to Beijing) is 6.37 yuan/liter.  Yes, the 3.67 price was significantly lower than the price for higher gas grades and diesel, but we assumed that was the result of heavy government subsidization. Of course we all know the wages of assumption.  In any event, I’ve corrected the post below using exchange rates, etc. as of today: October 22, 2008.

Corrected Post:

The Beijing Development and Reform Commission (the local NDRC) is hiking gasoline prices.  The Economic Observer Online reports that yesterday “the retail benchmark prices for gasoline and diesel” was “upped 200 and 290 yuan per ton respectively.”  The increase was “meant to compensate the increased cost in processing cleaner fuels conforming to Euro IV standard, which leads to lower pollutant emission and more environmental friendly.” 

The report notes that the government raised gasoline prices nationwide by 1,000 yuan/ton in June (discussed here) in a move to alleviate pressure on local refineries caused by “rising global crude oil prices.”  With global oil prices now falling, one motivating force behind this move must be to increase the cost of driving a car in Beijing.

What does this move mean at the pump?

The two large state-owned oil companies, Sinopec and PetroChina, are permitted to raise the retail price of gasoline by about 0.17 yuan/liter and diesel by 0.27 yuan/liter (Do both of these companies have retail outlets in Beijing? I thought they had, at least roughly, divided the country between them). Thus

• Grade 93 gasoline¹: 6.37 yuan/liter
• Grade 97 gasoline:    6.78 yuan/liter
• Grade Zero diesel:     6.50 yuan/liter

For those of you more comfortable with, Euros, pounds, or dollars (and gallons rather than liters) I’ve provided a handy conversion guide.  Beijing pump prices for Grade 93 in:

• Euros (€):  .57/liter
• Pounds (£): .73/liter
• US Dollars ($)²:   3.53/gallon

Remember, of course, that gasoline prices in the US and Europe include a fairly significant tax component which is not added to the retail price in China.

For instance, the average US price for regular unleaded gasoline for the week ending October 20, 2008 was $ 2.91/gallon last week.  Gasoline is taxed at both the state and federal level in the US, but the average tax burden is 47 cents per gallon.  Thus, an apple to apples comparison would put US prices at $2.44/gallon vs. $3.53/gallon in China.

1. The grade used by most private vehicles ↩
2. Converted to gallons ↩