China urged local governments to set up an early warning system to ensure sufficient oil supplies at filling stations, which face shortages across the nation.
The Ministry of Commerce ordered local authorities to monitor oil supplies and work out measures to cope with emergency shortages. The report didn't elaborate on requirements for the warning system.
Demand for crude oil in China has exceeded output as some refineries cut production because of soaring costs and government-capped fuel prices. The nation's crude oil imports also fell to the lowest in eight months in October as prices climbed to records.
`` China's fuel shortage will continue unless the government improves its pricing mechanism and raises domestic fuel prices,'' said Wu Jun, a Shanghai-based analyst with China International Futures ( Shanghai) Co. in a telephone interview today.
Premier Wen Jiabao last week said he would ask refiners to expand capacity to turn crude oil into fuels to run cars and factories. Some of the nation's refineries aren't running at their maximum operating rates, Wen said Nov. 21 in Singapore, where he attended the East Asia Summit.
``Refiners lack incentives to produce more after crude oil prices rose to a record. Domestic fuel prices are lower than international prices'' because the government determines prices, China International's Wu said.
China's government has urged refiners including China Petroleum & Chemical Corp., known as Sinopec, to ensure fuel supplies are sufficient, Xinhua reported. Many regions still face ``tight diesel supplies,'' Xinhua said, citing a notice from the Commerce Ministry.
China increased fuel prices by as much as 10 percent from Nov. 1 in what the government said was an ``urgent step'' to help the nation's oil refiners cover rising costs.
``The increase of fuel prices is far from sufficient to cover the cost of rising crude oil,'' Wu of China International said today. ``Some refiners may take advantage of the fuel shortage to press the government for a fundamental change of its pricing mechanism.''
Sinopec, China's largest oil refiner, plans to import 316,000 metric tons of oil products in December, about the same as the amount expected for November.
The company has imported 237,000 tons of oil products so far in November and expects 80,000 tons more of diesel to arrive in the provinces of Guangdong and Zhejiang within the month, Sinopec said in an online newsletter dated Nov. 23.
The oil refiner said Nov. 19 it will delay maintenance at five refineries in eastern and southern China to ensure domestic supplies of fuel.
China is the world's second-largest energy consumer after the U.S. ( Bloomberg )