The Chinese government has managed to keep the country's economic growth engine humming along - despite slowdowns in most other countries - by keeping fuel prices low. The government has been subsidizing gasoline to keep the price at $2.60/gallon, an increase of only nine percent since the start of 2007. By the end of the summer that situation may change as the central government is expected to lift those subsidies. The price of refined petroleum in China is about half that of the rest of the world. In 2007 the central Government spent about $30 billion keeping the price of gasoline down an amount that is surely much higher this year as oil has hit $140/barrel. Of course, none of these changes will happen until after everyone has gone home from the Olympics. After all, the Chinese wouldn't want the world to see protesters being arrested and carted off as gas prices double. The increase in fuel prices needs to come even though it will probably slow down the auto industry. The traffic and pollution problems of cities like Beijing and Shanghai can only be helped by such a slow down.

[Source: Seattle Times]

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