OREANDA-NEWS. January 21, 2014. Prompted by accelerating auto sales, China's oil refiners are ramping up gasoline output at the expense of diesel.

The production shift away from the diesel used by trucks, power generators and farm vehicles in favor of the gasoline used by passenger autos coincides with a national drive to improve fuel standards and so curb vehicle emissions.

Sharply higher motor-vehicle sales are one reason pollution is so bad in many of the Chinas cities. Vehicle emissions contribute as much as 30% of the fine particulate matter known as PM2.5—which is considered particularly hazardous—in urban air.

Chinese motor-vehicle sales in 2013 were up 14% from 2012, the biggest increase in three years, according to the government-backed China Association of Automobile Manufacturers. Sales totaled nearly 22 million vehicles—including almost 18 million passenger cars, up 16%.

Passenger-car sales have traditionally supported China's gasoline demand, which was up 12% in the first 11 months of 2013, according to government data, while diesel demand rose only 0.3%.

The government doesn't issue data on volumes of fuel used, but Wall Street Journal calculations—based on net imports and output, less stock changes—show gasoline consumption for that 11-month period growing to 85.2 million metric tons and diesel consumption contracting to 155.7 million tons. Overall refinery throughput for the period was up 3.6% from a year earlier.

"While industrial output and diesel demand growth have underpinned China's oil demand growth up until now, increasingly, transport is driving oil-demand growth in China," analysts at Bernstein Research said in a note in May, when the shift was gathering pace. "China's gasoline-demand growth has been outpacing that of diesel demand as China's economy weakens," they added.

China has long been a net importer of diesel and a net exporter of gasoline, but the growth in its car fleet is reshaping flows. In the January-November period, China was a net exporter of diesel, shipping abroad 2.7 million metric tons, or 62,000 barrels a day, customs data show, up 66% from a year earlier. And while gasoline exports were also up—by more than 63%—that surplus could eventually turn into a deficit as motor-vehicle sales climb. Gasoline consumption in China is forecast by Bernstein Research to reach 157 million tons in 2020.

With more cars appearing on the roads, and with an eye on future fuel-export earnings, the Chinese government has in the past year redoubled efforts to tackle worsening air pollution by improving fuel quality.

Last February, Beijing announced a four-year timetable for raising fuel standards to levels approximating those in U.S. and Europe. In March, it overhauled its fuel-price system, increasing state-owned refineries' revenue and giving them more incentive to improve fuel quality. And in September, it announced that consumers and refiners would both need to bear the costs of higher fuel standards.

Last week, China's Ministry of Environmental Protection said that it had tightened air-quality monitoring in 87 additional cities. Earlier this week, the ministry announced that all provinces, municipalities and regions have now signed a national-level document agreeing to reduce fine particular matter in the air by as much as 25% by 2017.