Although Chinese officials have blamed typhoons for delaying shipments of imported oil, the root cause of the problem is disparity between global and local oil prices, analysts and industry executives said.

Fearing inflation and a backlash from motorists and farmers, the government has refused to allow local pump prices to rise in tandem with the global benchmark.

Global prices have risen by about 30 per cent this year but Chinese prices by about half that, leaving local refiners such as Sinopec suffering large losses on sales of imported fuel.

A Sinopec official in Beijing, speaking on condition of anonymity, said Wednesday the company had been forced by the government to order its refiners to produce fuel for the local market, even though it was not profitable.

Sinopec Corp., the leading gasoline supplier to the business center of Guangzhou, has nearly doubled shipments of refined oil products to the city to 3,000 tons per day, from 1,900 tons earlier, China Daily said.

Gas is now available at nearly all the city's 500 service stations with only brief waits for drivers, it said.Surrounding cities have also been granted relief.
Gasoline and diesel shipments from other parts of China had been brought in to boost stocks, said a government spokesman in the city of Shenzhen, southeast of Guangzhou.

Taxi drivers who have complained of higher pump prices were receiving subsidies and checks were being carried out to detect price gouging by service stations, said the spokesman, who wouldn't give his name.

. . . . .In the long run, the country needs to float domestic oil prices more closely to the world level ... which in return will contain demand and balance the market," Ni Weidou, chairman of the Tsinghua-BP Clean Energy Research and Education Center, was quoted as saying by Xinhua.

Signs of supply shortages began surfacing earlier this month, with reports that Guangdong filling stations were limiting vehicles to 50 yuan worth of fuel - or about 11 litres of petrol.

At the pump in Guangdong, petrol retails for 4.28 yuan (R3.39) a litre.

Elsewhere, demonstrations in two oil-producing provinces in the Amazon have slashed Petroecuador's output to about 20,000 b/d from a normal level of 200,000 b/d.
"The news of Petroecuador pushed up the market early on, but the news out of Jordan has given everyone the urge to buy. However, the market still looks tight, with stops cited around $63.50/bbl [for the October futures contract].