Under the background of soaring global crude oil futures prices, since late May, Indonesia, China's Taiwan region, India, Malaysia and other emerging markets have successively raised retail prices of refined oil, which has also caused the market to pay more attention to the adjustment of China's refined oil price mechanism. This weekend, at the dawn of the 18th National Energy Conservation Awareness Week, relevant officials of the National Development and Reform Commission stated that they will actively and steadily push forward the reform of energy prices and take the opportunity to further rationalize the price of refined oil and natural gas. Market watchers said that the NDRC's position has raised the market's expectation of raising the price of refined oil, which means that China's long-term low oil price policy maintained by government subsidies will gradually withdraw. China's oil price will gradually be in line with international standards, and its impact can not be ignored.
International speculative capital pushes up oil prices On June 6, international oil futures prices hit a new high of US$138.54 per barrel. The United States Goldman Sachs also predicts that in the next two years, the international oil price will reach 200 US dollars per barrel.
The strong growth in demand for crude oil has become an important factor in pushing up the price of international crude oil futures. An industry source stated that although demand for crude oil from OECD countries has dropped significantly, demand from Asia Pacific and the Middle East has kept global crude oil consumption at a high rate of increase. Some large countries, such as the United States, India, and other countries, have implemented low oil price policies in the country, which has objectively stimulated the growth of crude oil demand. The growth of oil producers’ own demand has also become an important driver of higher oil prices. According to BP's latest 2008 energy statistics, the growth in demand for oil in the Middle East has even exceeded that of the Asia Pacific region.
However, the soaring of oil prices comes more from speculation in the futures market. Relevant data show that since the U.S. subprime mortgage crisis erupted in July 2007, speculative capitals, such as international hedge funds, have begun to withdraw large amounts of capital in order to avoid risks in the context of depreciating U.S. dollars, rising global inflationary pressures, and volatile world financial markets. Investing in commodity futures markets, with the help of oil, agricultural products, and metal futures to earn profits and preserve value. According to statistics, compared with 2003, the current speculative capital that has flooded into the international commodity futures market has increased by nearly 20 times to 260 billion U.S. dollars, of which more than 50% of the funds have been used for the trading of oil futures contracts. The total amount of oil futures contracted by speculative capital has exceeded 1 billion barrels. Experts said that speculators' large purchases of oil futures contracts create virtual extra oil demand, which continues to drive up oil futures prices. The higher futures prices will inevitably be linked to the oil prices in the spot market. The increase in oil consumption, the depreciation of the US dollar, and changes in the geopolitical situation have further contributed to speculators’ speculation. Since 2003, the U.S. dollar has devaluated more than 25% of the world's major currencies, global oil demand has risen by 8%, and international oil prices have surged by 277%.
Reforming the refined oil pricing mechanism is an inevitable choice At present, China's refined oil prices are not in line with international standards. In spite of the rapid economic growth, China’s ability to absorb increasing costs of imported crude oil has been strengthened. However, under the circumstances that the international oil price fluctuates significantly, there is a lag in the pricing mechanism of domestic refined oil, which cannot reflect the changes in the market and the supply and demand in the domestic market. It also stimulates speculation and interferes with normal operations and market order.
According to relevant data, in the first quarter of 2008, the financial subsidies allocated to Sinopec by the central government amounted to 7.4 billion yuan. Based on this calculation, if the current international oil price is more than US$140, it means that the subsidies for these petrochemical enterprises will probably exceed 150 billion yuan. One expert stated that state revenue should be used mainly for public expenditure rather than for subsidizing individual companies. If we use the central government's fiscal revenue to subsidize or support a policy of maintaining a low oil price, it is contrary to China's fiscal public expenditure principle and the inherent requirements of the market economy. Therefore, from the long-term benign operation of the national economy, the fiscal expenditures for such subsidies and tax reductions will not be borne by China's fiscal revenue, nor should it be borne. The series of natural disasters that have occurred since 2008 have also put forward more requirements for increasing public expenditure on central government revenues.
In order to realize the stable supply of coal-electricity-oil that was highlighted by the State Council, on the basis of the increase in refined oil products on November 1, 2007, steadily realizing the goal of the State Council’s "Comprehensive reform plan for oil prices" has become an urgent issue.
Adjust the impact of refined oil prices can not be overlooked This year, the domestic CPI has been high, some people worry that at this time straighten out refined oil prices will further increase the difficulty of controlling inflation. However, experts said that in fact, if the relevant factors are deducted or an appropriate reference system is established, the increase in the consumer price price is controlled at about 4.8% is a relative factor. Judging from the current economic situation, the increase in refined oil prices will not have a significant impact on the 4.8% target. The price increase may also bring about suppression of oil and gas consumption demand, and this may also be the reason for the international oil price to fall. A turning point.
In view of the current phenomenon of domestic product oil prices and crude oil prices hanging upside down, Zhang Dafu, deputy to the National People's Congress and chairman of Sinopec Jinling Petrochemical Co., Ltd., said during the two sessions that oil product price controls will prevent excessive price increases and stability in the short term. The domestic economic order will play a role. However, the long-term implementation of refined oil price controls will have an adverse effect on the sustainable development of the entire national economy. The long-term adoption of state subsidies for oil companies and consumers has contributed to the formation of a global subsidy for China. Only the rationalization of energy prices, including refined oil products, is mainly determined by the market, and through market fluctuations in oil prices, it rationally guides the behavior of investors, producers, and consumers. Only in this way can we truly achieve the most effective resource allocation. Do everything in your power.
Talking about the reform of refined oil prices, Wang Qing, chief economist of Greater China of Morgan Stanley, believes that at present, the domestic retail price of refined oil is approximately 1/2 of the international benchmark price level. This means that if China's oil prices are to be in line with international standards, it will need to increase by 70%-90% depending on the type of product. For the Chinese market, this is entirely a large-scale adjustment and its impact cannot be ignored. He believes that although the prediction of changes in China's policy is always full of challenges, it will be possible to see changes in the policy of rising oil prices in the coming weeks until mid-July. If prices did not increase before the Olympics, the likelihood of an increase after the Olympic Games will increase significantly.
International speculative capital pushes up oil prices On June 6, international oil futures prices hit a new high of US$138.54 per barrel. The United States Goldman Sachs also predicts that in the next two years, the international oil price will reach 200 US dollars per barrel.
The strong growth in demand for crude oil has become an important factor in pushing up the price of international crude oil futures. An industry source stated that although demand for crude oil from OECD countries has dropped significantly, demand from Asia Pacific and the Middle East has kept global crude oil consumption at a high rate of increase. Some large countries, such as the United States, India, and other countries, have implemented low oil price policies in the country, which has objectively stimulated the growth of crude oil demand. The growth of oil producers’ own demand has also become an important driver of higher oil prices. According to BP's latest 2008 energy statistics, the growth in demand for oil in the Middle East has even exceeded that of the Asia Pacific region.
However, the soaring of oil prices comes more from speculation in the futures market. Relevant data show that since the U.S. subprime mortgage crisis erupted in July 2007, speculative capitals, such as international hedge funds, have begun to withdraw large amounts of capital in order to avoid risks in the context of depreciating U.S. dollars, rising global inflationary pressures, and volatile world financial markets. Investing in commodity futures markets, with the help of oil, agricultural products, and metal futures to earn profits and preserve value. According to statistics, compared with 2003, the current speculative capital that has flooded into the international commodity futures market has increased by nearly 20 times to 260 billion U.S. dollars, of which more than 50% of the funds have been used for the trading of oil futures contracts. The total amount of oil futures contracted by speculative capital has exceeded 1 billion barrels. Experts said that speculators' large purchases of oil futures contracts create virtual extra oil demand, which continues to drive up oil futures prices. The higher futures prices will inevitably be linked to the oil prices in the spot market. The increase in oil consumption, the depreciation of the US dollar, and changes in the geopolitical situation have further contributed to speculators’ speculation. Since 2003, the U.S. dollar has devaluated more than 25% of the world's major currencies, global oil demand has risen by 8%, and international oil prices have surged by 277%.
Reforming the refined oil pricing mechanism is an inevitable choice At present, China's refined oil prices are not in line with international standards. In spite of the rapid economic growth, China’s ability to absorb increasing costs of imported crude oil has been strengthened. However, under the circumstances that the international oil price fluctuates significantly, there is a lag in the pricing mechanism of domestic refined oil, which cannot reflect the changes in the market and the supply and demand in the domestic market. It also stimulates speculation and interferes with normal operations and market order.
According to relevant data, in the first quarter of 2008, the financial subsidies allocated to Sinopec by the central government amounted to 7.4 billion yuan. Based on this calculation, if the current international oil price is more than US$140, it means that the subsidies for these petrochemical enterprises will probably exceed 150 billion yuan. One expert stated that state revenue should be used mainly for public expenditure rather than for subsidizing individual companies. If we use the central government's fiscal revenue to subsidize or support a policy of maintaining a low oil price, it is contrary to China's fiscal public expenditure principle and the inherent requirements of the market economy. Therefore, from the long-term benign operation of the national economy, the fiscal expenditures for such subsidies and tax reductions will not be borne by China's fiscal revenue, nor should it be borne. The series of natural disasters that have occurred since 2008 have also put forward more requirements for increasing public expenditure on central government revenues.
In order to realize the stable supply of coal-electricity-oil that was highlighted by the State Council, on the basis of the increase in refined oil products on November 1, 2007, steadily realizing the goal of the State Council’s "Comprehensive reform plan for oil prices" has become an urgent issue.
Adjust the impact of refined oil prices can not be overlooked This year, the domestic CPI has been high, some people worry that at this time straighten out refined oil prices will further increase the difficulty of controlling inflation. However, experts said that in fact, if the relevant factors are deducted or an appropriate reference system is established, the increase in the consumer price price is controlled at about 4.8% is a relative factor. Judging from the current economic situation, the increase in refined oil prices will not have a significant impact on the 4.8% target. The price increase may also bring about suppression of oil and gas consumption demand, and this may also be the reason for the international oil price to fall. A turning point.
In view of the current phenomenon of domestic product oil prices and crude oil prices hanging upside down, Zhang Dafu, deputy to the National People's Congress and chairman of Sinopec Jinling Petrochemical Co., Ltd., said during the two sessions that oil product price controls will prevent excessive price increases and stability in the short term. The domestic economic order will play a role. However, the long-term implementation of refined oil price controls will have an adverse effect on the sustainable development of the entire national economy. The long-term adoption of state subsidies for oil companies and consumers has contributed to the formation of a global subsidy for China. Only the rationalization of energy prices, including refined oil products, is mainly determined by the market, and through market fluctuations in oil prices, it rationally guides the behavior of investors, producers, and consumers. Only in this way can we truly achieve the most effective resource allocation. Do everything in your power.
Talking about the reform of refined oil prices, Wang Qing, chief economist of Greater China of Morgan Stanley, believes that at present, the domestic retail price of refined oil is approximately 1/2 of the international benchmark price level. This means that if China's oil prices are to be in line with international standards, it will need to increase by 70%-90% depending on the type of product. For the Chinese market, this is entirely a large-scale adjustment and its impact cannot be ignored. He believes that although the prediction of changes in China's policy is always full of challenges, it will be possible to see changes in the policy of rising oil prices in the coming weeks until mid-July. If prices did not increase before the Olympics, the likelihood of an increase after the Olympic Games will increase significantly.
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