BEIJING (Reuters Wed Nov 19, 2008) - China will impose a long-awaited fuel tax “very soon,” the head of National Development and Reform Commission’s (NDRC) Energy Research Institute said in comments reported on Tuesday by the China Daily.

“The announcement will come very soon, and actually specific plans have already been suggested to the government long ago,” Han Wenke, director general of the research body, was quoted as saying.

Beijing had held back on imposing the tax due to previous concerns about rising inflation, high and volatile oil prices, and a definitive fuel pricing scheme, officials had said.

China’s state-regulated fuel prices were below international pump prices for years, but the slump in crude oil prices in the last few months has made China’s retail prices comparatively high, giving the government a window of opportunity to cut prices and introduce a fuel tax without upsetting motorists.

The tax would be slightly above 1 yuan ($0.147) a liter and January, or earlier, would be a good time to roll out the change, Jiang Kejun, a NDRC Energy Research Institute member involved in formulating the fuel tax scheme, told the newspaper.

ZED COMMENT: The price fluctuation of petroleum fuel has a profound ripple effect on the economy of all countries. Especially, the price affects the transportation of goods and people, as well as the delivery of services. Rapid variations in pricing disrupts economic stability and a predicable marketplace. The domestic production of hydrogen fuel for use in the ZED engine provides long term stable energy and fixed transportation costs. This in turn, leads to stable, efficient economic growth.