Beijingers Cope with Higher Fuel Prices

There's a new slogan about town in Beijing: "You may be able to afford buying a car, but you may not be able to afford the cost of using it."

Auto owners and potential auto purchasers in Beijing are feeling the pinch of higher fuel prices stemming from higher world oil prices, and those prices are likely to continue climbing. No. 93 gasoline, the most popular fuel grade used in the 2.5 million vehicles prowling the capital's streets, sold at 4.26 yuan per litre in early August, the highest price ever.

A spokesman for the State Development Planning Commission (SDPC), the most powerful watchdog of China's national economy, implied recently that China is enduring an age of high oil prices and the situation won't change in the near future. 

On the eve of July 23, taxi drivers flocked to nearby gas stations and queued up to refuel their cars after they heard there would be a 2 jiao per litre increase in the price of gasoline the next day.

"Why not save your costs as much as possible?" a taxi driver waiting in line said, although he knew that night's refill would last for a mere two or three days and that he would not be able to avoid the added expense after that. Taxi drivers in Beijing might be the most upset, because their fuel-related costs were expected to increase by an average of 300 yuan a month, costs that they would not be able to offset with a proportional growth in income. Beijing has more than 60,000 taxis, but most of them move about with no passengers about 40 percent of their operational time. In Shanghai, a few taxi companies are complaining about a shortage of drivers. Taxi drivers choose to quit because their incomes are falling, a result of increased oil costs and unchanged fenrqian (shared costs with cab companies) charged them regardless of their profitability.  

Surprisingly, perhaps, though the price of gasoline is at record highs, the boom in private car sales has not diminished. About 1,000 new vehicles a day come to Beijing's roads, bringing a recent total to 2.41 million private automobiles.

"Beijing is too big," Si Lu, a new settler from Sichuan Province who landed a job in a Beijing State-owned enterprise a year ago, said. But Si plans to buy a car. He explained, "I am worn out every day after forcing myself out of crowded rush-hour buses and subways; I need a car to make my life easier."

Si said he thinks he will prefer paying car expenses to the awful go-to-work trip via Beijing's public transport. His logic has a ring of truth; public transport in Beijing, with its buses, trams and subways, which should be a most efficient means for commuters, are still too limited in range and city coverage to accommodate the many residents who live far from their inner city workplaces. Although more private cars add to traffic congestion in the city, people prefer to sit in them in traffic rather than in overstuffed, hot buses or subways without air conditioning. The possession of a car is a sign of wealth, but also a perceived true requirement for a more comfortable daily life.

But the effect of soaring oil prices is taking a toll on existing vehicle owners and potential buyers. Auto owners are now extremely interested in gas-saving tips and are tending to manage their cars in a more efficient way. In July, some of Beijing's car clubs and non-governmental organizations (NGO) promoted a campaign advocating not driving a private car for one day a month for the sake of environmental protection and energy conservation. On the other hand, the potential car buyers, worried about the future of oil prices, are looking to economical car brands, which are inexpensively priced and less costly to operate. In sharp contrast, the once-trendy SUVs (sports utility vehicle) are becoming increasingly unsaleable in the Beijing market, because they cost a great deal more to operate than smaller cars. In Beijing, the government advocates a private car policy that suggests: "Do not limit the purchase of a car, but limit the use of a car." Mounting oil prices, in a way, makes this advice easy to take.

Although the Chinese yuan recently appreciated in its value against US dollar by 2.1 percent, and although experts said the increased purchasing power could be a windfall for China's oil importers, the relatively slight appreciation will not necessarily lead to a dent in domestic gas prices, because fuel prices in China are still not fully integrated into the international fuel market and the central government still controls these prices.

Quite a lot of people still expect further declines in car prices, because they believe domestic car manufacturers will cut their procurement costs of overseas auto parts and will pass those cost reductions on to car consumers to cope with fierce competition. Unlike in the oil industry, the Chinese auto sector is much more responsive to the market; prices are largely determined by supply and demand, and no carmakers have a monopoly in the domestic market.

"I am glad to see the renminbi appreciating and I expect more appreciation in the future," Pei Jinggang, a resident living near the West Fifth Ring Road in Beijing said. "I will buy my first car in two or three years at an even lower price than now."

Surely, many people share Pei's thinking and his dream of owning a car. But the question is whether Beijing can accommodate, in terms of roads and its environment, more private cars.

"It is unbelievable to see so many cars in Beijing," said Xu Jianmei, who recently completed a term as a reporter in London and returned, to her surprise, to a traffic-jammed Beijing. "The traffic in Beijing, I am sure, is much worse than in the capitals of most developed countries now."

Indeed, traffic and environmental problems in the capital are becoming more troublesome, and something must be done about it. Hence, it is very likely that the costs of driving a car will increase, which may require a much higher tax on gasoline purchases and higher parking fees such as are seen in most European or American cities.

But higher oil prices are also affecting other transportation modes, including air travel. The Chinese aviation regulatory authority recently resumed allowing "fuel-use charges" of 80 yuan per ticket. Domestic airlines have been sandwiched by high oil prices and fierce competition in recent years. Most airlines are operating in red. The resumed fuel-use fees, however, are insufficient to offset losses.

"The added fee cannot turn us around," a spokesman for one airline said. "It can merely lessen the pain of high oil prices for us." The spokesman added that State-owned airlines are very careful about raising ticket prices to offset increased jet-fuel costs for worry of losing passengers to competitors."

Though increasing oil costs increase the daily expenses of urban residents, it has also increased the people's awareness for the need to conserve energy. Beijingers, well known for their political interest and sensitivity, know that China is facing an uneasy situation as it strives to procure energy sources abroad sufficient for its economic growth. They are joining the chorus calling on the government to encourage conservation to save energy, oil, water and power. Many inspiring "posts" can be found on the Internet suggesting ways to save energy, and this concern is mirrored in the Beijing's media. There seems to be a growing consensus on the part of Beijing's residents supporting energy conservation.