Officials are calling for a new standard on car emissions to be delayed for two years until the right fuel can be supplied across the whole country.
China, the world's second largest auto market, introduced the third generation of gas emission standards across the whole country by July 1.
The new standard, similar to so-called European 3 regulations, cuts allowed emissions by half, compared with current rules.
However, the National Environment Protection Bureau is facing hurdles in implementing the new standards.
Government officials have called for the standards to be kept on hold until the end of 2009, when the right fuel will be available across the country.
"Major fuel refiners, including Sinopec and PetroChina, have so far failed to supply the fuel to fit the Euro 3 standard nationwide," said Li Wanli, a senior official from the National Development and Reform Commission, who is in charge of the industrial policy planning department.
"They are updating their facilities and expanding capacity, and that takes time."
There are about 85,000 gas stations in China, mostly operated by Sinopec and PetroChina.
Wang Liangju, a former fuel equipment expert in the national automobile association, was quoted earlier as saying that it takes oil companies at least three years to improve technology and make low-sulfur fuels, with investment estimated to cost between 20 billion yuan (US$2.6 billion) and 30 billion yuan.
Other analysts also suggest that the rule should be introduced gradually from first-tier cities to inland regions, as long as the higher quality fuel is available.
Beijing, Guangzhou and Shanghai were the only three cities selected to implement the third-generation emission standard in a trial last year.
Beijing is also expected to be the first city to meet stricter fourth-generation standards by the end of this year, before hosting the 2008 Olympic Games.
An official from Sinopec said only Beijing has supplies of the newer gasoline and diesel fuels, while Guangzhou and Shanghai only have limited capacity of the newer gasoline.
"We still have lot of difficulties in supplying the whole country with high-quality fuel, and it is unrealistic for us to meet the demand right now," said the official, who declined to be named.
"The timing gap of having sufficient compatible fuel to match with stricter emission standards will exist for a long time. We should spread the application of new standards step by step in a drive toward a higher level."
