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World Gas stations ration petrol in China shortage

09:05  28 october  2021
09:05  28 october  2021 Source:   bbc.com

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Petrol stations in many parts of China have begun rationing diesel amid rising costs and falling supplies. Some truck drivers are having to wait entire days to refuel, according to posts on social media site Weibo. China is currently in the midst of a massive power crunch, as coal and natural gas shortages have closed factories and left homes without power. And this latest issue is only likely to contribute to an ongoing global supply chain crisis, say analysts. "The current diesel shortages seem to be affecting long distance transportation businesses which could include goods meant for markets

Gas stations in many parts of China have started rationing diesel supplies amid surging costs and falling supplies of the fuel used for heating, generating electricity and powering cars and trucks. The diesel supply squeeze adds to energy pressures on the world's second-largest economy. The shortage of fuel for trucks threatens to further complicate the global supply-chain nightmare. "Diesel-powered vehicles can hardly get enough fuel as prices rise," said a truck dealer in Shijiazhuang, a northern city in Hebei Province. Local gas stations are limiting diesel sales to 100 liters per truck

Petrol stations in many parts of China have begun rationing diesel amid rising costs and falling supplies.

  Gas stations ration petrol in China shortage © Getty Images

Some truck drivers are having to wait entire days to refuel, according to posts on social media site Weibo.

China is currently in the midst of a massive power crunch, as coal and natural gas shortages have closed factories and left homes without power.

And this latest issue is only likely to contribute to an ongoing global supply chain crisis, say analysts.

"The current diesel shortages seem to be affecting long distance transportation businesses which could include goods meant for markets outside of China," said Mattie Bekink, China Director at the Economist Intelligence Unit

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China has been grappling with shortages of coal and natural gas that’s led to power rationing and blackouts, crimping economic activity in some regions. Attention has now turned to diesel China has also reduced diesel exports and increased imports to try to maintain adequate stockpiles. Independent as well as state-owned oil refiners have repeatedly raised wholesale diesel and gasoline prices, citing skyrocketing costs for imported crude. That’s crimped margins for local retailers, and in some cases, led to fuel being sold below cost, creating yet another reason for filling stations to limit sales to customers.

China has been grappling with shortages of coal and natural gas that's led to power rationing and blackouts, crimping economic activity in some regions. Attention has now turned to diesel China has also reduced diesel exports and increased imports to to try maintain adequate stockpiles. Independent as well as state-owned oil refiners have repeatedly raised wholesale diesel and gasoline prices, citing skyrocketing costs for imported crude. That's crimped margins for local retailers, and in some cases, led to fuel being sold below cost, creating yet another reason for filling stations to limit sales to customers.

"Depending on the duration and intensity of this crunch, we could well see this contribute to the global supply chain challenges."

The global supply chain crisis has been largely driven by the Covid-19 pandemic, with demand surging as economies re-open.

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In China, trucks are only being allowed to fill up 100 litres each - about 10% of their capacity, a truck dealer from Shijiazhuang city in Hebei province told Chinese business news service Caixin.

In other parts of the country, reports suggest rations are even tighter with drivers only allowed to buy up to 25 litres.

Meanwhile, in the city of Fuyang, about a seven hour drive south of the key transportation hub of Shijiazhuang, Caixin reports petrol stations are limiting purchases or charging drivers surcharges of up to 300 yuan ($47, £34) to fill up their tanks.

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China has been grappling with shortages of coal and natural gas that’s led to power rationing and blackouts, crimping economic activity in some regions. Attention has now turned to diesel, which is one of the main beneficiaries of the energy crunch because it can be used to power smaller Sales of generators surged in recent weeks after electricity rationing was put in place, according to sellers that spoke to Bloomberg. Orders have streamed in earlier than expected this year ahead of winter. China has also reduced diesel exports and increased imports to to try maintain adequate stockpiles.

China has been grappling with shortages of coal and natural gas that’s led to power rationing and blackouts, crimping economic activity in some regions. Attention has now turned to diesel China has also reduced diesel exports and increased imports to to try maintain adequate stockpiles. Independent as well as state-owned oil refiners have repeatedly raised wholesale diesel and gasoline prices, citing skyrocketing costs for imported crude. That’s crimped margins for local retailers, and in some cases, led to fuel being sold below cost, creating yet another reason for filling stations to limit sales to customers.

"After going to a few [petrol] stations, there is no more diesel, and prices will continue to rise, and large trucks running logistics will not be able to refuel," one Weibo user wrote.

Another also bemoaned the impact on inflation and deliveries.

"Do you get the feeling that food has become more expensive and the express delivery is slower? It would be better to buy less on 11/11," referring to Alibaba's Single's Day, typically one of the biggest days of the year in China's shopping calendar.

China's coal shortage

Aidan Yao, a senior emerging Asia economist at AXA Investment Managers, told the BBC while the market is well aware of China's coal shortage, the "diesel problem is new".

"All fossil fuels have seen a price renaissance lately as the underinvestment in these fuel sources has created a shortfall of supply at a time when demand is surging," he said.

"Oil, gas, coal prices have all moved in tandem and are through the roof."

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China has been grappling with shortages of coal and natural gas that’s led to power rationing and blackouts, crimping economic activity in some regions. Attention has now turned to diesel China has also reduced diesel exports and increased imports to to try maintain adequate stockpiles. Independent as well as state-owned oil refiners have repeatedly raised wholesale diesel and gasoline prices, citing skyrocketing costs for imported crude. That’s crimped margins for local retailers, and in some cases, led to fuel being sold below cost, creating yet another reason for filling stations to limit sales to customers.

Nearby gas stations run by PetroChina and local private operator Taihua each offered the same discount, promoting the bargain prices with eye-catching red banners, free car washes, and credits in pre-paid petrol cards. Price battles were rare before 2013 as rigid government price controls capped margins. As recently as 2010, gas stations rationed diesel fuel as shortage hit. But the plunge in global oil prices since 2014 and the sudden rise of independent refineries known as teapots transformed the market by flooding the country’s 90,000 petrol stations with cheaper fuels.

Oil prices have hit their highest levels since 2014 in recent weeks, causing fuel crises in places such as Europe and the UK.

Part of this has been driven by coal and natural gas shortages in countries like China and India, which analysts predict will see users switch to oil for power generation and heating.

Such demand could boost overall crude consumption by more than half a million barrels of oil a day.

"This is merely the latest manifestation of shortages impacting China," Jeremy Stevens, Chief China Economist at Standard Bank told the BBC from Beijing.

He said companies are already turning to diesel-fuelled generators to keep their factories open during the power crunch.

"The heart of the matter is the energy crisis," he said.

Both Mr Yao and Mr Stevens warned that these current power crises show the dangers of switching to renewables too quickly.

"The path to net zero is treacherous and the journey needs to be planned carefully," Mr Yao said.

Additional reporting by Wai Yee Yip

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