Fuel Shortages Across S. China As Oil Companies Square Off With Central Gvn. Over Subsidies

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DONGGUAN, China, Sept 28 (Reuters) - "Meiyou, meiyou" -- "None here, none here!" the petrol station attendant shouts, waving his arms at a small truck pulling up to the diesel pump to signal that it is dry. Without stopping, the truck rolls on in search of the fuel elsewhere -- another casualty of the low-profile but intense battle between China's government and its increasingly independent oil firms over who should fund fuel subsidies.

The showdown has caused diesel shortages in parts of China's booming coastal province of Guangdong for weeks, according to drivers, gas station managers and industry sources, as refiners seek to staunch losses by reducing sales. The dry pumps are a distant echo of the fuel criss in the summer of 2005 that sparked long lines and a government crackdown on oil firms' huge exports. Beijing suspended tax incentives and set export quotas to keep more fuel at home.

"There is definitely a shortage going on," said a manager at a state-owned petrol station in Dalang township, who requested anonymity. "But on the whole, it's much better than in 2005."

The dry pumps are a tangible reminder of the price distortion that makes top refiner Sinopec's (SNP.N: Quote, Profile, Research)(0386.HK: Quote, Profile, Research) earnings unpredictable, and can distort fuel demand in the world's second-biggest oil consumer. Despite repeated promises to gradually allow fuel prices to catch up with global rates, Beijing maintains a tight grip on rates, fearful that costlier energy could spark inflation or unrest. Gasoline prices have not been increased since May 2006.

EDIT

http://uk.reuters.com/article/oilRpt/idUKHKG22863720070...