Gas stations, truck drivers bear brunt of diesel shortage, price hikes
Published: Oct 29, 2021 04:43 PM
A gas station employee refuels a vehicle in Shijiazhuang, North China's Hebei Province

A gas station employee refuels a vehicle in Shijiazhuang, North China's Hebei Province

Gas stations in many parts of China are running out of diesel after supply constraints posed by the booming demand for coal transportation and factories using diesel to generate electricity.

Several gas stations in North China's Hebei Province told the Global Times on Friday that pumps had been empty from days to even a week. Those who have just acquired supplies face a limited amount of diesel delivery to each customer, in addition to charging them a higher price.

"Each customer can only buy a fixed amount, because there isn't enough at the moment," an employee from a gas station in Shijiazhuang, capital of Hebei, told the Global Times on Friday.

Staff from another gas station said that the diesel price had increased in recent days by 0.2 yuan ($0.03) to 7.22, but they cannot say if the price will continue to rise or there will be any diesel available in the near future.

"The diesel price hike is driven by demand for the booming transportation of bulk cargo, especially coal, which has now entered a peak season, while some factories have also increased their use of diesel to generate electricity to complete orders amid tight power supplies," Han Xiaoping, chief analyst at energy industry website, told the Global Times on Friday.

The latest diesel crisis has hit the cargo business, especially smaller operators with limited cash flow and bargaining power. 

An employee with a logistic company based in Qingdao, East China's Shandong Province, said that they turned down new orders or those involving long distance transport, because of the high diesel price.

Truck drivers are very sensitive to diesel price hikes since they bear the brunt of any price change, the analyst said.

The price of domestic refined oil soared in October. The domestic 92-octane gasoline price was 9,062 yuan per ton, an increase of 17.11 percent from a month ago, while the diesel price was 8,135.4 yuan per ton, a monthly increase of 19.07 percent, industry data shows.

Oil prices have continuously hit multi-year highs recently, with Brent crude hitting $86.70 a barrel on Monday - the highest since October 2018, the Star reported on Friday.

As a country with 70 percent of total crude oil consumption reliant on imports, the Chinese oil market is also vulnerable to international market changes, Han said.

The National Development and Reform Commission issued a notice on October 22, raising domestic gasoline prices by 300 yuan per ton and 290 yuan for diesel.

To stabilize supplies, Sinopec's monthly distribution of domestic diesel in October rose by a monthly-average of 20 percent compared with the previous three quarters, media reports said. The company plans to continue to increase distribution by 18 percent more than October to ensure domestic diesel supplies.

"The tight situation is expected to be a temporary one that will be largely eased after the heating season this winter," Han said.