Oil crisis: as consumers pay more producers get rich
Beijing (AsiaNews/AFP) The impact of soaring oil prices is still not abating in China.
Hong Kong is concerned about China's austerity measures and the impact of rising oil prices on its main overseas market, the US.
"The forecast for Hong Kong's economic growth in 2004 should still be 5.9%, "said Dong Tao, an economist with Credit Suisse First Boston, "but could be reduced to 5% if oil prices averaged US$ 40 a barrel for the year."
"I wouldn't be surprised if oil shot up to US. The wild cards are whether Russian oil company Yukos will file for bankruptcy and whether the war in southern Iraq will intensify," said Gordon Kwan, China energy specialist with the Kingsway Group.
In the meantime airline and public transit companies are trying to offset higher fuel costs as best they can.
Beginning next month four air carriers, among them Cathay Pacific Airways and Dragonair, will apply extra fuel surcharges.
In the absence of a regulated mechanism allowing them to pass fuel costs onto passengers, Hong Kong's bus companies are looking for ways to cut administration budgets to offset higher fuel costs.
But soaring oil prices do not create losers only. Buoyed by high oil prices and wide profit margins in oil and chemical products China's state-owned oil companies are reaping record first-half profits.
Net profits for PetroChina, the country's largest oil producer, are expected to grow by 12.38% for a net profit of 85.02 billion yuans (around US$ 10.2) for the whole year.
Rival China Petroleum & Chemical Corp (SINOPEC), which has bigger downstream oil refining and chemical production but a smaller oil and gas production operation than PetroChina, is expected to post interim net profit growth of 49.15% or 15.96 billion yuans (around US$ 1.9 billion).
Strong profit growth by Chinese oil companies is however partly due to low comparison with last year when earnings from downstream operations were hit by SARS. (MA)
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