Approaching Lifted Oil Prices

State Development and Reform Commission, said the person has, the current oil price policies are conducive to social and economic stability. This is the media interpreted as a suspension of oil price increases. However, I believe, in the context of rising international oil prices, senior government officials claimed that oil prices once again rise out of suspension, is that oil price control under tremendous stress, refined oil pricing mechanism reform already is Coming.

Needless to say, our country lags behind oil price reform, malpractice obvious.

First, human-induced inverted domestic refined oil prices. Oil companies are listed overseas companies, the state financial subsidies to oil companies oil price is no different from transfer payments by interest groups to hand over foreign investment to send money; Chinese goods are exported the United States and Europe countries, the state subsidy that low-priced commodity exports, equal to State subsidies for the developed countries with money. Meanwhile, the majority of our oil refinery in the central region, while oil consumption is the most developed eastern regions, the price inversion result is less developed areas to subsidize developed regions.

Second, increasing the financial burdens. According to reports, the implicit state subsidies for the oil price in 2007, more than 220 billion yuan, accounted for 0.9% of GDP that year. The higher international crude oil prices continue to fall more likely than the possibility of domestic inflationary pressure and at another is difficult to reduce oil price controls will continue to subsidize and therefore will become the norm. But the long-term subsidies not only unsustainable, but also with the financial reform of public orientation and our market-oriented economic reform of step.

Third, price controls inevitably distort the market. A new report, China’s refined oil prices more than 50% below international prices. Inflation in the short term is difficult to eliminate in the case, long refined oil price controls will inevitably contribute to the black market has prompted some companies illegal export of oil, increasing domestic market tension, and in turn boost domestic oil prices. This is why supply the domestic market often without food, and oil exports are the reasons for repeated business.

Fourth, the policy of low prices led to inefficient use of energy. Statistics show that China is now the world’s one of the lowest oil prices, is only about 61% of the United States, Japan, 41%, 28% of the UK. Policy of low oil prices brought the inefficient use of energy. A typical example is the automobile market growth in the overall slowdown in the domestic auto market to gas-guzzling SUV known but thriving, in the first 4 months of sales compared to last year jumped 40%, far higher than passenger cars growth rate. At the same time, high fuel consumption, large displacement car market is booming school of deformity. This indicates that the policy of low oil prices and energy saving and emission reduction targets is diametrically contrary to the pursuit.

Of course, oil pricing mechanism is a special period of reform under a temporary stop to avoid the risk of inflation, the overall socio-economic stability had to take countermeasures, but is no doubt that reform unavoidable. Oil prices is temporary and does not let go, lifting the ban is inevitable. Reform the oil pricing mechanism to postpone the more the price will be higher. How to size up the situation, grasp the establishment of transparent and reasonable pricing the best time to test the wisdom of the government.

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