Present Pricing Mechanism Of Petroleum Products In China

With its rapidly developing economy, petroleum consumption in China tends to be on the rise in recent years, which leads to serious problems, with potential security hazards in petroleum supply on the one hand, and environmental pollution on the other. With the present pricing mechanism of petroleum products, excessive policy objectives have caused such problems as that the administered price of petroleum products set by the government turns against demand and supply of the market, worsening the relation between demand and supply of petroleum products, resulting in frequent"short in supply"in recent years and inefficiency in resource configuration.This thesis falls into four parts. Part I. Introduction deals with the research background, literature review, research methods and implication. The writer makes a comparison between the price control pattern for mercantile rate of return of the U. S. A. and the price-ceiling pattern of the U. K., analyses the research into the pricing mechanism of petroleum in China, and evaluates the issue in regard to whether or not the fuel consumption tax should be implemented. The writer concludes that there is no such a research into the efficiency loss caused by the present pricing mechanism of petroleum products in China, and the paper is aimed to look into this aspect. Through historical review and analyses of the present state of the pricing mechanism of petroleum products in China, the writer will investigate the major drawbacks in the system. This paper actually evaluates the efficiency loss brought forth by the present pricing mechanism, and suggests for the first time the establishment of a state petroleum price control institution. Part II consists of two chapters. In Chapter two, through a review and a description of the past and the present pricing mechanism of petroleum products in China, the writer discovers that gradual reform on the price could avoid the risk of the international market, lay the emphasis on the bearing ability of all social levels, and follow the excellent tradition of steady progress, which could serve as the precedence for further reform on the pricing mechanism. In the third chapter, the writer looks into the behavioral choice of the producer and the consumer under the present pricing mechanism, using standard analysis. It is concluded that the present pricing mechanism worsens the relationship between demand and supply, which is contradictory with the state policy of saving energy and reducing pollutant emission, and economic structure adjustment. Empirical analyses indicate that the present pricing mechanism causes considerable loss to state revenue, enterprises and the consumer. Chapter four forms the third part of the thesis. Through a survey of the pricing mechanism of petroleum products of the major countries in the world, the writer reaches the conclusion that marketization is the future direction for the oil price reform in the world. In countries where strict state control and government subsidy are in practice, the policy concerning oil price has been loosened. The various mistakes made by countries where strict price control was implemented in the process of marketization and lessons from other countries are greatly instructive to China in its reform on the pricing mechanism of petroleum products. On the basis of the above mentioned studies, the writer puts forward in Part IV suggestions for reform: to go in the direction of price marketization, loosening the control over circulation, import and export of petroleum products, collecting the fuel consumption tax according to the price, rather than the quantity, strengthening legislation and matching regulations, establishing special institutions for petroleum administration at the state level, strengthening and improving the anti-monopoly system, to guarantee the supply and security of petroleum for the development of national economy.