China has decided to stimulate demand for alternative fuels
with a standard financial measure: raising the fuel tax. The fuel tax on gasoline will climb from the equivalent of 13 cents a gallon to 64 cents, while the tax on diesel
will rise from 6.5 cents a gallon to 51 cents. Ouch. While this measure will be partially offset by the current low oil prices, China has announced plans to keep fuel prices more directly tied to crude oil prices. The Chinese government believes that this measure, the perceived volatility in gas prices
, will help citizens opt for more fuel-efficient cars, alternative fuels and fuel-saving technologies. The first changes to the gasoline price scheme were designed in 1994, but now is considered an ideal time to update them.