Studies Of Domestic Gasoline Pricing Mechanism

Goal of China’s economic reform is to establish a socialist market economic system, which should play a basic role in economy. As crude oil and gasoline are important matters of national security and key industries of national economy, the management is more cautious when the reform started. And the purpose of the reform is still a pricing mechanism with the market pricing.However, international crude oil prices at a high level since2005and more volatile, in order to maintain stable and healthy economic development China’s gasoline price is not frequent fluctuations. Thus the current gasoline pricing mechanism may not fully reflect the real supply and demand of domestic revenue and the cost of petrochemical enterprises. Take all factors that affect oil prices into account and improve oil pricing mechanism, which enable real oil prices reflect the cost of petrochemical enterprise revenue and can really react domestic oil supply and demand structure. But gasoline pricing mechanism reform also lays solid foundation for future domestic oil market prices.Firstly, we take the pricing of oil products into a relatively simple framework to find a more reasonable answer. In this simple framework, oil market participants are simply identified as the two main producers and consumers of oil products.Because the producers of oil products market is definitely the main supplier, and the consumer is the most important oil market demand, and they therefore must be subject simplified able to explain most of the extent of market behavior, and thus has a strong persuasive. In the simple model of international crude oil prices and domestic crude oil prices are simply assumed to be the same, so that it can simplify the analysis. In a general equilibrium, the domestic gasoline price is a function of the marginal product of international crude oil prices and marginal product of the certain kind of oil. After that simple model, we should also consider another important market players which take crude oil as raw material for industrial production enterprises. Crude oil as raw material for industrial production enterprises is an important role, which increase the demand for crude oil, and therefore directly affect the price of crude oil, and also directly affect oil production costs. Therefore it is necessary to consider oil pricing by their participation. Three subjects in the general equilibrium analysis, the need to consider how the various states of crude oil allocation between the two manufacturers. We assume three prices:a domestic crude oil prices, international crude oil prices and a price of crude oil in stocks. In such a general equilibrium the allocation of various states of crude oil is related to production efficiency. Price equilibrium price of gasoline is related to the various state of crude oil, production efficiency, and the prices of other commodities and manufactures petroleum.Then this paper presents some of the gasoline pricing policy recommendation. First, the gasoline pricing mechanism should bring some competitive tools of oil market. Secondly, the gasoline pricing mechanism should guide rational consumption of consumers of gasoline. Thirdly, it should accelerate the reform of gasoline support mechanisms. Fourth, it should establish an effective system of legal supervision. Finally, the reform of gasoline pricing mechanism should be at an appropriate time. Oil products are related to the development of our economy and also related to the improvement of people’s living standards. Therefore the timing of the reform of gasoline pricing mechanism is important.