Sixty Days of a Local Refinery(1)

From Cover, issue no. 340, November 5th 2007
Translated by Zuo Maohong
Original article:[Chinese]

Zhang Shusheng let out a sigh. In the past two months, the vice general manager of Changyi Petroleum and Chemical Corporation in Shangdong province has gone through a lot of suffering.

The 500-yuan rise in the retail price of oil products on November 1st hints that the oil shortage has passed, but it doesn't mean that firms like his are in the clear. Palpable financial losses still await them.

As far as Zhang recalls, this has been the fourth widespread oil shortage in the nation, and his company has rode the ups and downs throughout. But he has no idea when the next will come.

Multiple Burdens Under Oil Shortage

While oil cans crowd the factory yard, a desolate eight-lane road betrays a more dire business climate. In the past, tank trucks queued to purchase oil at the gate.

Wang, a local taxi driver, says, "It's been hard to get gas in Weifang City and Changyi county (both in Shandong). A scattering of stations with gas have limited sales to no more than 100 yuan per customer. Larger vehicles can never fill up."

In the past two months, the mayor of Weifang has paid three visits to Zhang's company, urging it to guarantee sufficient supply of oil products to the market.

"But the problem is, although the company is operating normally, gas stations are suffering losses - the more they sell, the more they suffer."

According to Zhang, the oil shortage this time arises not from a gross shortage, but price imbalance. Despite China's purchases of foreign oil according to market prices, retail prices are still tightly leashed.

The supply and demand chain has started to break apart as international and mandated local prices edge farther apart. Recently, oil on the international market has soared to 600 dollars per ton.

Founded in 1986, Changyi Petroleum & Chemical is the only high-output, top-grade fuel manufacturer in Weifang, and one of 15 refineries in the province after the government's clean-up of the industry.