Adjusting to rising world oil prices

The surging oil prices are affecting Chinese industries. Qi Tianxing tells us that transportation authorities are seeking more economical and environmentally-friendly substitutes for petroleum. And the logistics industry is suffering from the increasing costs as well.

Mr. Gao is a veteran taxi driver in Weifang City of Shandong Province. He's seen oil prices jump a lot over the past decade. And he has changed his car to run on natural gas now. This can help him save more than 50 percent when filling up his fuel tank.

Gao Lehua, Taxi Driver, said, "This car runs more than 200 kilometers a day. That means I can save 60 yuan each day by using natural gas. That's over 20 thousand yuan a year."

It costs 5 thousand yuan to convert an engine from one that runs on a petroleum-based fuel to one that runs on natural gas. So it only takes three months to recover the cost. Currently, 90 percent of the taxis in Weifang run on natural gas. The city has also converted its buses to run on natural gas.

Driving schools have opted for indoor classrooms with simulated driving, instead of letting their students learn outside.

Surging oil prices have also cut profit margins for logistics companies.

Many logistics firms are considering raising price. But most large companies have already signed long-term contracts with customers, without clauses that would allow for price hikes. They have to find other solutions.

Li Hanting, Manager of Donghong Logistics, said, "It's hard for us to talk about price rises with our customers. We have shrinking profit margins. But we are strengthening regulations and improving services to expand our business. We're also negotiating with customers to get them to understand our situation and allow us to adjust prices."

Experts note that some small logistics firms will be eliminated from the market. So the high oil prices can be seen as accelerating an industrial reorganization.