China to adjust oil prices more frequently

China has cut the retail prices of gasoline by 310 yuan per ton and diesel by 300 yuan per ton. The National Development and Reform Commission, the economic planner, has also announced that a reform in the oil pricing mechanism is underway to allow oil prices to better reflect the fluctuations of the international crude oil prices.

Ten days after an oil price increase, Chinese drivers are seeing another price change. According to the National Development and Reform Commission, China will adjust oil prices every 10 days in the future. The period has been shortened from the previous 22 days. But not everyone is happy with the constantly changing fuel prices.

Earlier in March, the National Development and Reform Commission briefed the press about reforming the oil pricing mechanism as it failed to timely reflect the volatility in global oil prices. The announcement came after a gasoline price hike on the Chinese mainland and a downward adjustment in gas prices in Taiwan in February which triggered widespread complaints about the mechanism.

According to the China Petroleum and Chemical Association, China will be relying heavily on imported crude oil. In the next few years, around 60 percent of crude oil will come from abroad. China's fuel consumption will be affected by international crude oil prices more than before.

Another change in the pricing mechanism is to remove the minimum limit of a 4 percent fluctuation in international crude oil prices. Previously, China's fuel prices were adjusted when crude oil prices in Brent, Dubai and Cinta changed by more than 4 percent.

All these measures are being done to tie China's domestic fuel prices more closely to fluctuations in the international market. Experts say the new mechanism is also helping China's major oil companies to make ends meet on their balance sheet. But the National Development and Reform Commission also said if the international oil prices see drastic ups and downs, it will step in with easing policies.