CHINA TOPIX

11/22/2024 02:24:29 pm

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Chinese National V Standard Proposed, Gasoline Price May Increase


The foggy-day in Beijing has been the hot topic for a long time since the early of 2013, which impacts the northern China. Two of the major reasons for the weather are the exhaust gas of motor vehicles and the coal-fired plants.  The Beijing government is proposing the legislation to improve the quality of the gasoline to ease the air pollution situation.

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It is mentioned in the proposal that the gasoline should not include any elements relate to methylal, phenyl amines, phosphorus, silicon, and sulfur dioxide chemical compounds to meet the new requirements of the National V standard. Comparing with the National III and IV standards, the V requires that the sulfur content should be less than or equal to 10 PPM (PPM means part per million), which is a significant modification for the National V standard. The analyst Wang Yanting said that the low percentage of the sulfur content would has less harm to the depurator so that the depurator would work more effectively than before.

It is concerned the gasoline price will rise due to the new quality requirement. To satisfy the new standard, the oil refinery will have to upgrade the equipment and the facility. Besides, they may have to choose other raw materials, hire techniques persons to complete the task. The outcome will be the higher production cost for the oil refinery, resulting in the rising gasoline price for the customers. It is estimated that the cost will go up to hundreds of billions. Another concern is that the new technique will improve the quality of the crude oil and reduce the production volumes at the same time.

"Not all the oil refineries have the capacity to update the equipment and facility. The entire project may take three to five years to complete. The sum output will drop down and will solve the condition that the supply exceeds the demand." No matter how, the gasoline price may probably rise after implementation of the new requirement. Some analysts have different opinion, saying that the predicated budget is overmuch. Although the production cost is higher, the increasing degree is subtle to the final gasoline price.

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