SHANGHAI, June 19--After resisting pressure to hike fuel prices for seven-and-a-half months, China--the world's second-largest consumer of oil--said late Thursday it would dramatically raise the cost of gasoline and diesel.
China's chief economic planning body, the National Development and Reform Commission, said gasoline and diesel would go up by 1000 yuan or $145 per ton -- 17 and 18 percent respectively. Aviation fuel, meanwhile, would rise by 1,500 yuan or $218 per ton.
The official New China News Agency said electricity prices would also be raised for most businesses, but residential homes and some industries would be exempt.
For the past year, Beijing has been struggling with how to deal with rising global oil prices while reining in record inflation at home.
In November, the government allowed fuel prices to jump by 11 percent to 5,980 yuan per ton for gasoline and 5,520 yuan per ton for diesel. At that time, the government pledged to keep those prices and prices for other daily necessities, such as pork and cooking oil, frozen for the near future.
China's artificially regulated oil prices have been blamed for spurring shortages in the domestic market as oil companies have hoarded supplies and refineries have stopped processing in order to avoid losses. At the previous prices, domestic refineries were losing more than $100 for each ton of crude they processed.
The situation has caused China's oil company stocks to tank in recent months. For instance, shares of PetroChina, which in November became the world's first trillion-dollar company by one measure of stock market capitalization, is now trading at half its peak.
The fuel price increase is the latest in a string of measures China has taken to cut its use of fossil fuels and raise energy efficiency. The soaring cost of energy, along with environmental damage due to high use of oil and coal, is threatening to derail the country's double-digit economic growth.
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