Chinese authorities announced Wednesday a rise in the prices of gasoline, diesel and aviation fuel by 500 yuan (67 dollars) per ton, or roughly 10 percent.

The increase, effective Thursday, came after fuel shortages swept petrol stations from southern China to Inner Mongolia in the far north as refiners cut supply because domestic prices lagged far behind record global crude prices.

"It's certainly good for us," Tang Weizhong, deputy board secretary with Sinopec Shanghai, told AFP about the increase.

Sinopec and PetroChina are the two major players in the nation's fuel industry which, despite huge profits in upstream operations, take big losses at the pump because of China's central pricing system.

"We had terrible losses before the price hike... they should have done it long before," said Tang, whose comments were echoed by other Sinopec officials.

Refiners lose money as they have to buy crude oil on the global market, but then can only onsell the fuel products at government prices, which have been capped in an effort to keep inflation down.

The government last increased local fuel prices in May last year.

International oil prices have jumped around 30 percent since 2005 to above 90 dollars a barrel, prompting refiners to withhold stock in a blunt signal to the government that they wanted domestic prices raised.

But Sinopec's Tang insisted that, despite the latest hike, supplies would remain tight until a more market-based pricing system was put in place.

His position is one that industry officials have long held.

Beijing has resisted giving up control of fuel prices because of the impact that would have on inflation, already running at an uncomfortably high level of 6.2 percent in September and 4.1 percent in the first nine months of the year.

For China's communist rulers, one fear is that inflation would lead to social unrest.

But if they do not act to bring domestic prices in line with international prices, they could face rising anger over the fuel shortages, a taste of which was seen this week.

Anger turned to tragedy when two drivers were killed while lining up for fuel, according to state press reports.

In one incident reported on Wednesday by the government mouthpiece, the People's Daily, a trucker in central Henan province was killed in a fight after another driver cut in line.

A similar incident occurred in eastern Shandong province where a man was stabbed at the weekend, the China News Service reported.

The tensions were similar to those seen in the southern business hub of Guangdong province two years ago when huge fuel shortages forced the government to raise prices and promise to change its pricing mechanism.

But much to the frustration of refiners, little change has come about, and firms have warned that the government's response is inadequate.

"As a state-owned firm, we have to continue operations even if we are loss making but output from Sinopec alone still cannot meet all the demands," said Zhang Qiming, a sales manager at Sinopec's distribution division.

"The price hike basically does not help smaller local refiners because the wholesale price of gasoline for them is around 6,700 yuan but the price was raised to only 5,980."

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