CHINA'S top planning agency dismissed recent calls to lower fuel prices because conditions to do so haven't been met under its pricing mechanism despite a slump in international crude prices.
The remarks were made in response to claims by the public that China's current domestic prices fail to reflect falling international crude oil prices.
But the National Development and Reform Commission also assured the public that it would cut pump prices if crude prices continue to fall to a level that could trigger an adjustment.
Under a mechanism introduced in late 2008, China adjusts refined fuel prices when the 22-day moving average price of Brent, Dubai and Cinta crude changes more than 4 percent.
"For now the average price of the three reference crudes is still higher than the level on April 7 when China (last) raised fuel prices," an unidentified official in charge of the pricing department under the NDRC was quoted by Xinhua news agency as saying.
He pointed out that conditions therefore are not right for China to lower domestic fuel prices now.
According to industry consultant C1 Energy, the 22-day moving average price of Brent, Dubai and Cinta has actually risen 2.38 percent as of last Friday.
The official said Brent crude had risen above US$120 a barrel after the last price hike and although it was enough to trigger another price increase China has decided not to raise the price in order to tame inflation.
Although the government has not adjusted benchmark retail prices, wholesalers in some regions have already cut prices for their oil products.
Wholesale prices for oil products in southwest China's Chongqing fell by 300 yuan per metric ton in July.
Major oil companies, including PetroChina and Sinopec, have lowered wholesale prices by 30 to 100 yuan per metric ton in Shanghai, Nanchang and Fuzhou.
Another NDRC official said the price changes reflected market realities and complied with the government's macroeconomic regulations. He cited lower import tariffs for oil products that have been in effect since July 1, as well as higher domestic fuel output, as reasons for the wholesale price cuts.
Oil prices have been increasingly sensitive recently as a result of the country's stubbornly high inflation rate. China's Consumer Price Index, a major gauge of inflation, hit a three-year high of 6.4 percent in June.
Brent crude plunged more than US$3 to around US$106 a barrel yesterday after Standard & Poor's stripped the United States of its top-notch AAA credit rating amid concerns that US oil demand is slowing.