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In the past two or three months, the CPI has gradually begun to decline, and experts believe that it will continue to fall in the second half of the year. Against this background, with the sharp fall in international oil prices, the domestic oil and oil prices have been significantly reduced, which has created favorable conditions for China to rationalize oil prices.
After oscillating higher for two days, after touching $118/barrel, on August 28, the international market crude oil futures price returned to $115/barrel again. This year, crude oil prices in the international market are like roller coasters, breaking 100 US dollars from the beginning of the year to a record high of 147.27 U.S. dollars per barrel on July 11th, followed by a sharp turnaround. Within a month, it broke below $120/barrel, and on a minimum, it dropped to $113.01 per barrel on August 12. Even so far, the decline in international oil prices is still nearly 20%.
After the Beijing Olympic Games have been successfully held, does the deep fall in international oil prices mean that the time has come for China's refined oil prices to meet international standards?
The assertion that the end of commodity “bull market†pointed out to early experts pointed out that factors such as the slowdown in world economic growth, the suppression of market investment speculation, and the return of the US dollar have become the main reasons for the drop in international oil prices. Recently, Russia withdrew its troops from Georgia and Iran’s nuclear Mitigation of geopolitical tensions, such as the easing of problems, also effectively relieved the market of oil supply concerns and became a short-term factor in the drop in oil prices.
Then, after the "bull market" in recent years, the price of international oil prices can go long? Lehman chief energy economist Ed Morse believes that from the current situation analysis, the decline in international oil prices may still continue. He predicted that crude oil prices will stabilize between $90 and $100 a barrel. However, some other people in the industry are obviously not so optimistic. They cautioned that it is still too early to assert that the global commodity bull market is over.
Zhou Dadi, a researcher at the Energy Research Institute of the National Development and Reform Commission, said that it is not advisable to “blindly optimistic†about the downward movement of oil prices. This is because, on the one hand, in the short term, after the further decline in the price of oil, if the Organization of the Petroleum Exporting Countries cuts production and restricts production, or when emergencies such as geopolitics and weather occur, it will have an impact on supply. With the advent of the heating season in winter, the demand for oil in the northern hemisphere will once again reach a peak; in addition, the fundamentals of the global economy are still good, and it is difficult for oil demand to fall sharply. On the other hand, it is still difficult to judge whether the depreciation trend of the U.S. dollar has actually changed. From a medium to long-term perspective, international crude oil production capacity will remain sluggish in the next few years, and it will be difficult for oil supply to increase significantly in the short term. Alternative energy sources will be difficult to pick out in the short term. Therefore, as a non-renewable resource, oil is difficult to change for a long time.
Creating Opportunities for the Reform of Finished Product Oil Prices With the end of the Beijing Olympics, the call for accelerating the reform of domestic refined oil prices has once again risen; and the continuous fall in international oil prices has created a good opportunity for the reform of refined oil prices.
At present, China's crude oil prices are already in line with international standards, but refined oil prices are still controlled by the government. In order to ease the “upside down†of domestic crude oil and refined oil prices, China’s oil prices have again been significantly raised since June 20 this year. The National Development and Reform Commission once increased the domestic automobile and diesel price by 1,000 yuan per ton, and increased the price of aviation kerosene per ton. For 1,500 yuan, the price increase is not too small. Even so, the price increase is still only equivalent to the level of 100 US dollars/barrel, which is still a huge gap compared with the record high oil prices in the international market, which has exceeded the level of US$140/barrel. The main reason for not being able to get it in one step is to take into account the macroeconomic and downstream affordability and fear that it will further aggravate domestic inflationary pressures.
However, experts said that when the price of oil rises, energy prices are still not in line with international standards. On the surface, they seem to be able to curb inflation. However, in the long run, they delay the timing of China's energy price adjustment. Zhu Baoliang, chief economist of the Economic Forecasting Department of the National Information Center, also believes that in the short-term, rising energy prices will put pressure on the inflation situation, but if energy prices are to be rationalized and step-by-step, and short-term inflationary pressures are released, Will gradually ease.
The recently released central bank’s second quarter monetary policy report also pointed out that improving the resource pricing mechanism and timely correcting the price of refined oil products can not only reduce the risk of shortages caused by price distortions, guarantee supply, but also help curb unreasonable demand and promote economic growth. Structural optimization and transformation of development methods fundamentally relieve the pressure of inflation.
What is gratifying is that with the unremitting efforts of all parties, the CPI has started to decline gradually in the past two or three months. Experts believe that the last few months of the second half of the year will continue to fall. Against this backdrop, with the sharp fall in international oil prices, the domestic crude oil and refined oil prices have been significantly reduced in magnitude. According to estimates, after the National Development and Reform Commission raised the price of domestic gasoline and diesel on June 20, the adjusted price cost was equivalent to the oil price at the level of 100 US dollars/barrel, while the current international oil price has dropped to the level of about 115 US dollars, which is China's Rationalizing oil prices created good conditions.
Zhang Guobao, deputy director of the National Development and Reform Commission and director of the National Energy Administration, made it clear earlier that the general direction of China's energy price reform is to follow international market rules, and is now gradually transitioning from the government-controlled price system to the market price system, and pricing of domestic refined oil prices. The mechanism will adopt a gradual approach to international standards. He said that the changes in domestic refined oil prices after the Olympic Games will be adjusted according to the overall economic development of China and the energy conditions at home and abroad.
Although the top executives have made a determination to straighten out refined oil prices, the executive authorities are still very cautious in choosing specific plans. It is reported that the current NDRC's adjustment of domestic refined oil prices is continuing to wait for a more appropriate time, or wait for the international oil price to continue to fall back to natural convergence. It has not yet finally resolved.
Deng Yusong, Director of the Market Economic Research Office of the Development Research Center of the State Council, proposed a two-step view of the reform of refined oil prices, namely, straightening out the price level to ensure the normal supply of refined oil; then, gradually improving the oil circulation system and government regulatory policies. Based on the above, after the market competition is relatively complete, the oil prices will be fully liberalized and the companies will independently determine their prices according to the international and domestic market conditions.
However, in the absence of preparations for the market over the weekend, the NDRC announced that it would increase the on-grid tariff of power plants, which will allow market participants to further strengthen their expectations for the next increase in oil prices.
Deep decline in oil prices creates a good opportunity for refined oil reform
Although China has already clarified the target and direction of price reforms for resource products and formulated comprehensive reform plans for oil prices, due to the influence and concerns of various external factors, the pace of reforms to rationalize the relationship between energy prices such as oil has been slow.