China Backs off Energy Subsidies, Sharply Raising Prices. By Keith Bradsher, NYTimes, June 21, 2008. "Faced with increasingly severe fuel shortages and the prospect of power failures during the summer air-conditioning season, the Chinese government unexpectedly announced sharp increases late Thursday night in regulated prices for gasoline, diesel and electricity... The government has come under intense pressure recently from both environmentalists and other governments to ease up on its fuel subsidies, which are blamed for distorting global markets, encouraging greater consumption and pushing oil prices higher for other nations... Finally, despite fears that it will spur inflation, the government raised the retail price of diesel by 18%, to the equivalent of $3.58 a gallon, and the price of gasoline by 16%, to $3.83 a gallon. Electricity tariffs and the price of jet fuel were also raised. The higher prices could prompt businesses and people across China to use less fuel and electricity, potentially slowing China's voracious oil consumption as well as its steep rise in emissions of global warming gases. Following the news, world oil prices immediately dropped more than $4 per barrel... China is the world's second largest oil consumer, after the U.S. With the announcement Thursday, China became the eighth Asian country to raise fuel prices in the past month."
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