UPI Energy Watch

China battles to keep stable prices

A top economic planning body urged local governments to keep stable market prices after it raised refined oil prices.

To balance higher costs caused by increased oil prices, the Chinese government appropriated subsidies for public transportation and passenger transportation in rural areas, according to the Xinhua news agency.

The National Development and Reform Commission raised the prices of gasoline, diesel oil and aviation kerosene nearly 10 percent last week. Prices of refined oil products are set by the central government and refiners have been losing profits with high crude prices.

The average retail price of gasoline now stands at $802 per ton and diesel is $739.95 per ton. The increasing global oil prices have led to small refiners drastically cutting down on production -- forcing Sinopec to fill the void.

"As global crude prices and the CPI stay at high levels, it is possible for the authorities to seek a compromise by not raising fuel prices but giving subsidies to major refiners at the end of the year," said Niu Li, an economist with the State Information Center at the NDRC.

Enbridge in oil sands deal

Enbridge Inc. said it has signed a deal to advance its Alberta oil sands project.

The deal with Fort Hills Energy to develop pipeline and terminal facilities will meet the phase 1 requirements of the oil sands project in Alberta.

“We are pleased to have been selected by the Fort Hills partners on the strength of our operating and pipeline development experience in the oil sands region,” said Patrick Daniel, president and chief executive officer of Enbridge Inc.

Oil sands are one of the most promising non-traditional oil sources, largely found in Canada.

Daniel said the $2 billion Fort Hills Pipeline project will be one of the company's largest and is expected to contribute continued earnings.

The Fort Hills Project includes a mine and bitumen extraction plant and an upgrader. The facilities plan includes a pipeline from the mine site to the upgrader site with an initial capacity of 250,000 barrels per day of diluted bitumen.

The project will also include a diluent pipeline with an initial capacity of 70,000 barrels per day.

High oil prices spur push to alternatives

Increasingly high oil prices worldwide are pushing some to seek alternatives.

In France, fishermen at ports on the west coast have gone on strike to protest the rising cost of fuel and are demanding state aid.

French Finance Minister Christine Lagarde would not cut fuel taxes to relieve pressure. She asked the Paris-based International Energy Agency to encourage members of the Organization of Petroleum Exporting Countries to do more to boost oil production amid record prices.

OPEC nations have already said they will increase the amount of oil on the market. At their last meeting Sept. 11, OPEC agreed to raise output by 500,000 barrels a day from Nov. 1, amid growing concerns that high oil prices may adversely affect global economies.

In addition to her pleas to the IEA and OPEC, Lagarde urged consumers to change their habits to reduce fuel consumption by driving more slowly or choosing alternative modes of transport.

In the Philippines as well officials are calling more recently for investment and use of renewables, other oil alternatives and efficiency and conservation.

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Closing oil prices, Nov. 5, 4 p.m. London

Brent crude oil: $90.37

West Texas Intermediate crude oil: $95.56

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(e-mail: energy@upi.com)