China's Refined Oil Pricing Mechanism And Countermeasures Of Defects

Oil is the foundation of modern production life and social civilization, which is also the basis of national economy and an important factor affecting economic development. Oil is an important national security strategic material. The fluctuation of oil price plays an important role on the international and domestic political and economic situation. As a major source of energy, the reasonable degree of the price of refined oil has very important significance to national economy and people's living standard.Similar to most industries, China's oil industry experienced from a highly centralized planned economy to a market economy evolving reform process. At present, China's refined oil pricing mechanism still has many problems. The structural of the price mechanism is not transparent enough. The participation of interest groups also makes the pricing mechanisms are affected. From the fundamental point of view, although the refined oil price had been gradually linked with international market prices, but there is a time lag. The pricing mechanism is still under government guidance.In this paper, theoretical analysis and empirical research methods was combined. First, we use the basic principles of economic theory to make the social welfare analysis of the refined oil pricing mechanism. In a change in international oil prices, but not quickly act on the domestic oil prices, there will be a short-term expectation of oil prices of the international market. This short-term expectation will make the manufacturers change their actions in the expected direction of prices in different circumstances to respond. By analyzing the changes in the welfare of producers and consumers, we can see that under the two expectations of increases and decreases of international oil price, part of the consumer surplus will be transferred to the monopoly of the domestic and foreign manufacturer's hands. There is a welfare loss of social. Second, this paper use VAR model and verify that the domestic refined oil prices was affected by the expected impact of international crude oil prices. Real needs of the domestic market and oil processing costs are not the main reason of the domestic prices. Since the existence of rational short-term expectations, resulting in hoarding and selling artificially, causing oil prices failed to reflect the objective market conditions, which affect the reasonableness of the price of refined oil, and also affect industrial production and people's lives.There are mainly two current world oil price formation mechanisms:one is priced by market competition, one is priced by the state. The general trend is to keep the market transition. By drawing two pricing mechanisms, this paper argues that, in the domestic gasoline and diesel ex-factory price, it can increase the extent of close linkage with the international market, opening the price, shortening until the elimination of adjustment to eliminate the indirect integration of short-term speculation and to bring price changes lag. As to the wholesale and retail aspects, the current implementation of the price ceiling is a British model, which for the retail market to ensure price stability, promoting the formation of competitive environment, have good facilitating role. According to the different uses of oil, there will be different steps of implementation. Distinguish between gasoline and diesel between the two different uses and characteristics. Price of gasoline may be asked to implement first, then observe and sum up experience, and then the price of diesel fuel will be gradually opened up. The implementation of the reform journey can be progressed step by step. Meanwhile, we need to improve the pricing mechanism of other complementary measures, such as improving the economic rationality of the strategic oil reserve system, developing oil futures market, promoting the formation of market competition, breaking monopolies, which in order to better improve the oil pricing mechanism.