$3 A Gallon In China? The Government Pays

China has so far been immune to the punishing price of gas thanks to a government ensuring that building for the Olympics goes full speed.

That means trucks carrying supplies must keep running, CBS News correspondent Barry Petersen reports.

Still, diesel shortages are spawning long lines.

"Sometimes," says one driver, "I wait all night in line."

China isn't defying the laws of economics; the government is subsidizing gas prices keeping them artificially low. But this week, bowing to international pressure, authorities said they'd allow gas to rise 18 percent. But even with that, a gallon of gas here is still less than three bucks.

What's not clear is whether increases at the pump will spark consumer protests -- something Chinese authorities are anxious to avoid before the Olympics.

And, despite recent increase, the Chinese still have a love affair with gas guzzling SUV's. You can still fill up a Hummer-2 for about $100 here, 30 percent less than in the United States.

All that may end once the Olympics are over if the government ends all subsidies. And Chinese drivers may finally feel the rest of the world's pain, right the pocketbook.
  • Barry Petersen

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