THE use of old-fashioned price controls to fight inflation is causing road chaos in some parts of China as speculators hoard fuel and refineries send their product overseas.

The oil price edged above $US99 a barrel on the New York Mercantile Exchange yesterday but Chinese authorities continued to hold retail fuel prices well below the cost of production. Retail prices have risen only 10 per cent this year, but this masks rampant profiteering on the wholesale market.

In Guizhou, the largest energy exporting province in southern China, retailers had capped the price of diesel at 5.24 yuan a litre, or 79 Australian cents, a little more than half of the average Australian price.

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