Effect Of Refined Oil Products Pricing Regulation On Oil Industry

In today's society, oil is one of important fundamental energy sources. Since 2003 the world economy gradually recovers, international crude oil prices rises dramatically. The process of industrialization and urbanization in China needs more oil. China has become a net crude oil importer since 1993, and its dependence on foreign crude oil continues to improve. Crude oil price is linked fully with the international market in China, while prices of refined oil product are still controlled by the government. Now the prices of refined oil product are based on Brent, Dubai, Meters crude oil prices plus reasonable expenses and proper profits. In light of the national economy and the people's livelihood under lingering inflationary pressures, the government control the prices of refined oil product that make international crude oil price and domestic refined oil prices, whole sale prices and retail prices hang upside down in recent years and "Gasoline Shortages " occur frequently. Refining businesses suffered overall losses in some years, which are subsidized by the government and become the focus of public criticism. The problem that refined oil products pricing regulation can arise after all to oil industry how old influence is one of topics in the theoretical research communities, also one of aspects needs to be considered during the reform of refined oil products pricing mechanism. Based on the empirical research, this paper analyzes the mutual influence between crude oil price at home and abroad and the prices of petrol and diesel. as well as the impact of retail prices of refined oil on oil refining industrial output and profit, then raises some relative policy suggestion on the basis of above analysis.The content and structure of this study is as follows:In the first chapter, we put forward the background of the selected title, main results of the research, arranged structure, innovation and inadequate.The second part is a general picture of oil market. reviews the history of refined oil pricing mechanism reform and introduces implementation and problem of refined oil pricing mechanismChapter 3 through trend extrapolation and ARMA model predicts the demand for refined oil product, gasoline and diesel fuels during Twelfth Five-Year Plan. The result shows that refined oil product, gasoline and diesel fuels will increase rapidly in the next Five-Year Plan, refined oil product will grow 11% a year on average, gasoline will grow 7% a year on average and diesel oil will grow 11% a year on average. Therefore we should expand production, improve efficiency and the market-oriented pricing mechanism, exert influence on demand through the adjustment of price, in order to achieve the purpose of saving energy and reducing emissions.This article establishes a VAR model, and analyzes the relationship between the prices of gasoline, diesel oil and the price of crude oil. The result shows that for every 1% change in crude oil price will lead to 0.028% change in retail price of gasoline and 0.032% change in retail price of diesel oil, which indicate that transmission mechanism of oil price is blocked and the retail prices of gasoline and diesel oil can't reflect crude oil price well.Chapter 5 uses co-integration theory and error correction model to explore influence elements and influence extent over oil refining industrial output and profit. The results shows that refined oil retail price is positively related to oil refining industrial output, if refined oil retail price changes 1%, refined oil supply will change 6.3584%; both main business cost and total assets are negatively related to oil refining industrial output. if main business cost changes 1%. oil refining industrial output will change 1.6281%,and if total assets changes 1%, oil refining industrial output will change 1.5284%, When oil refining industrial output deviate from the long run status of stability and balance, short-term adjustment will be on 14.42% of its adjustment dynamics to the status. There is co-integration relation between oil refining industrial profit, refined oil retail price, oil refining industrial output, main business cost and total assets. If refined oil retail price raises RMB100/ton, oil refining industrial profit will increase RMB3.2 billion; if oil refining industrial output increases 10000 tons, oil refining industrial profit will increase RMB 28.18 million; If main business cost raises RMB 100 million, oil refining industrial profit will increase RMB22.08 million; If total assets raises RMB100 million, oil refining industrial profit will increase RMB14.57million; When oil refining industrial profit deviating from the long run status of stability and balance, short-term adjustment will be on 51.37% of its adjustment dynamics to the status.The final part of this paper gives some policy recommendations according to the previous analysis:promoting the refined oil pricing mechanism reform; developing multi-body oil market; implementing oil market tax and related policies; encouraging refiners to expand production; building the strategic repertory of petroleum; controlling expenditure and cost of refiners strictly.The best advantage that the paper contains is that using trend extrapolation and ARMA model predicts the demand for refined oil product, gasoline and diesel fuels during Twelfth Five-Year Plan, using VAR model analysis analyzed the relationship between the price of gasoline,diesel oil and the price of crude oil.The shortcoming of this paper is lack of data, for example, the data of refined oil retail price, oil refining industrial profit, main business cost and total assets and so on. The conclusion will not be affected by the shortcoming.