Study Of The Role Of Government In China's Natural Gas Pricing Mechanism

Natural gas prices have always been affected by the impacts of the government, the market and corporation based on the history of natural gas producing and consuming countries'experiences. However, natural gas pricing has long and unavoidably been under government control. Since the 70s of 20th century, the governments globally have gradually loosened the control of energy given the context of a variety of energy sources substitutes accompanied by high competitiveness among energy sources, development and use of new energy has been extensively made. Natural gas, as one of the clean energies, is encouraged to be used gradually by governments all over the world. The policy of deregulation adopted by governments will effectively stimulate the continuous development of the natural gas market.At present, China's energy consumption structure is not reasonable, whose natural gas consumption in the proportion of energy consumption structure is comparatively rather low. In recent years, under the guidance of the sustainable development strategy, China has been on the way to encourage natural gas production and consumption, Hence, natural gas consumption in the proportion of energy consumption structure will be reasonably increased beneficial from the governmental favorably adopted policies. Chinese government used to strictly control the price in natural gas industry chain, where the pricing management lagged far behind the development of natural gas industry and its market level. The price of natural gas are less market-oriented during the planned economic period, where pricing was unable to timely reflect the relationships among market supplies and demands and scarcity of resources, and it can not correctly reflect the resources true value, nor optimize the allocation of resources. Therefore, natural gas pricing mechanism's reforming is of a must facing Chinese government. Government's strict controls of natural gas pricing mechanism have hindered the potentially increasing development of natural gas industry, thus leading to the necessity of governmental deregulation in Chinese natural gas.Governments have played an important role in the development process of the natural gas industry, yet whose regulation should be development oriented and policy and regulatory frameworks oriented, and whose fundamental roles are to supervise policy implementation, to coordinate and guarantee the interests natural gas industry's development in its upper, middle and lower streams of productions and consumptions chains respectively of the interests by establishing a strict regulatory system to supervise natural gas pricing, and keep Chinese natural gas industry on its healthy and substantial development way.This dissertation, given the current situation and the development of China's natural gas pricing mechanism , firstly points out that the currently adopted pricing mechanism adopted by Chinese government is restricting the development of China's natural gas and natural gas market-oriented pricing mechanism is a barrier to the development of China's natural gas industry by using both theoretical and empirical research to analyze the natural gas pricing mechanism in different stages of development and the role of government in each stage accordingly. Then it discusses and analyzes some regulatory issues in China's natural gas industry development and the changes of Chinese government roles from strict control to the government regulatory in China's natural gas pricing mechanism by proposing some workable suggestions in natural pricing mechanism.