China's Development and Reform Commission announced it cut the price of gasoline by 220 yuan (US$28) per ton and cut the aviation fuel price by 90 yuan per ton from yesterday.

An employee works at a gas station in Shanghai January 14, 2007. China has cut the retail price of gasoline for the first time in nearly 19 months, a surprise populist move that will hit refiners in the short-term but could set the stage for more market-based prices, analysts say. [Reuters]

Shanghai authority said the city won't reduce taxi fares soon because the price should be adjusted on a yearly basis after a new mechanism took effect in May, which allows taxi fares to float with fuel prices to counter the influence of rising gas prices on the taxi industry and drivers.

From May 11, the city raised the base fee, which covers the first three kilometers of a trip, to 11 yuan from 10 yuan during the day, and the price after 11pm to 14 yuan from 13 yuan. The price of each additional kilometer was also increased from 2 yuan to 2.10 yuan.

Beijing's taxi fare won't be decreased because its mechanism stipulates only when gasoline prices drop to 4.26 yuan per liter will the price be cut 0.20 yuan per kilometer, while the current price hasn't reached that mark.

In Guangdong , the 1-yuan surcharge fee won't be canceled until the gasoline price drops to 3.70 yuan per liter. Some drivers said the pricing department should cut the price by 0.50 yuan per liter rather than the current 0.22 yuan.

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