Just as the Wenchuan earthquake intensified the already strained oil supply chain, the international crude oil price broke the high price of US$130 per barrel. Diesel oil in various parts of China has been frequently stricken due to price fall. Is it because of the danger of rising inflation, whether the price of refined oil will be adjusted to the pressure of supply and demand, or whether it will bring in more financial subsidies to reduce the losses caused by low oil prices? A dilemma will be chosen to test the government’s response.
After the State Council's executive meeting on May 28 gave instructions on “stabilizing refined oil prices and strengthening price regulation,†many agencies issued research reports on refined oil products that will be upgraded in the near future. Guosen Securities even anticipates that China will increase oil prices before the Olympic Games. Once, the rate is not less than 800 yuan / ton.
Affected by the recent upward adjustment in the price of refined oil products, the two oil companies and Sinopec Corp. in the past two days have continued to surge under the broad market. "Look at the stock market to know that the market is expected to have high oil prices." Cheng Xiusheng, director of the State Council Development Research Center pointed out that although the current timing is not suitable to release refined oil pricing, the government may fine-tune refined oil prices to ease the "oil "Absurd" and price hanging upside down.
The increase in the price of diesel-reduced crude oil is expected to increase. In order to curb the “oil shortage†and drastically increase the import of crude oil, the international crude oil price exceeded US$130/barrel on Thursday. The immediate effect of this surge is the extreme tension in China's diesel supply.
Until the evening of May 28, Mr. Feng, the freighter owner from Shanxi to Beijing, had been stranded for two days at the entrance of a PetroChina gas station because trucks did not add diesel. Mr. Feng, anxious, complained: “If the price of oil rises, we can add oil. We would rather go up. Now we can't add oil. We can't transport freight, and the loss is even greater!â€
According to the reporter, the price difference between domestic and foreign refined oil reached 2,000 yuan/ton in the first quarter of this year. The current spread is already close to 3,000 yuan/ton, and the difference between diesel and diesel is nearly 6,000 yuan. As the adjustment of domestic refined oil prices has lagged behind the rise in crude oil prices, the domestic oil refining industry has suffered losses for three consecutive years since 2005.
“The price difference between domestic and foreign countries is close to 3,000 yuan/ton, the enthusiasm of oil refinery producers has been severely suppressed, and the intensification of contradiction between supply and demand has brought direct impact on the transportation, aviation, and agricultural industries, and the economic operating efficiency has also been affected. The government is expected to increase slightly in the near future. Oil prices to ease the contradiction between supply and demand." Cheng Xiusheng pointed out.
Chen Fengying, director of the Institute of World Economy at the China Institute of Contemporary International Relations, believes that under this oil price, the government will not properly increase oil prices, which will have a very negative impact on the transportation industry and agriculture. Chen Fengying believes that given the relatively large extent of oil price inversion now, if the oil price is raised, it will inevitably lead to rising production costs. To prevent it from putting pressure on PPIs and CPIs, the government should adjust them in stages and adopt corresponding subsidy mechanisms. The use of oil, such as agriculture, public transportation, can be subsidized, and it can be used for private vehicles, such as private cars. Private cars are big oil users, but this group of people cannot afford high prices.
Although the price is released or until 2010, the price of oil may rise, but it is still adjusted under the government's price control. When the price of refined oil products can be released, the government can unload the increasingly heavy financial subsidy pressure shouldered by oil prices, but it has become a dilemma.
On May 21st, the market price of oil and gas products may be released at the beginning of June. However, on May 22nd, the National Development and Reform Commission released an announcement on its website to clarify the rumor and stated that it would not release refined oil prices in the short term. The main reason is that the current price of lifted refined oil products is not conducive to controlling CPI.
“The government can not release refined oil prices at this time. The timing is indeed wrong.†According to Cheng Xiusheng, the current international oil prices have been rising due to speculative factors that violate the supply and demand relationship. At this time, the refined oil prices will be released and will be brought to the domestic market. There is a lot of pressure, because of the low cost pressure brought by the low exchange rate of the renminbi, and under high CPI, we must also consider controlling inflation. Cheng Xiusheng believes that at present, the country can only ease the losses in the oil refining industry through tax cuts.
“After the government missed the timing of the low oil price in 2006, the timing of reopening refined oil prices may not be until 2010. By then, the US dollar is expected to be relatively stable, the stock market will stabilize, and the futures market will have less impact on oil prices. The international oil price will be weakened. It is expected that there will be an inflection point. If it can fall below US$100 per barrel and the normal price is between US$60-70 per barrel, the government can release the refined oil price in a timely manner.†Chen Fengying also believes that the current international oil price is high at US$130, and the international hot money. Speculation everywhere, but the realization of the domestic CPI target itself is already difficult, and it is by no means a time to release refined oil prices.
However, Chen Fengying stressed that considering energy conservation and environmental protection, it is only a matter of time before the price of refined oil is released.
Waiting for oil futures If it is difficult to implement refined oil prices in the short term, will China have other market means to solve the contradiction between oil price conflicts and supply and demand?
"On the one hand, raising oil prices will bring inflationary pressures. On the other hand, China's low oil prices have become the culprit for international speculators to drive up oil prices. These dilemmas are actually due to the problems existing in China's oil trading methods. China does not have oil futures. It is destined that China does not have oil pricing power, but can only be exploited by high oil prices in vain," said Han Xiaoping, CIO of China Energy Network.
In Han Xiaoping's view, the oil trades of China's oil companies and oil-consuming enterprises are all in the spot market, and there is no hedging. Companies do not have the right to voluntarily choose to trade, and there is not a diversified market, so that companies can buy stocks. You can buy futures, so companies can only accept high oil prices in the spot market.
Fortunately, China has already started fuel oil futures, and some companies have already made profits from fuel oil futures. “We are doing fuel oil futures. Guangdong's diesel oil is extremely tight. We get fuel oil in the fuel oil futures market, and then we pull it back into Guangdong to re-refining it. Some of it is converted into diesel for supply to trucks, and the remaining heavy oil is used for ships. "A private enterprise owner in Guangdong told reporters.
Han Xiaoping said that unfortunately there was no opening of refined oil futures. In fact, the government can try to open diesel futures first, so that some companies can hedge their pressure on diesel by providing hedging in the futures market.
Chen Fengying also pointed out that if China wants to gain a say in the world energy market, it must push forward in the futures market. Only fuel oil futures are not enough. Only the introduction of crude oil futures can compete for the international discourse right in the energy sector. “But crude oil futures are introduced first. It is necessary for the government to liberalize the price control on the domestic refined oil market and rationalize the domestic and foreign oil prices. This requires a process."
After the State Council's executive meeting on May 28 gave instructions on “stabilizing refined oil prices and strengthening price regulation,†many agencies issued research reports on refined oil products that will be upgraded in the near future. Guosen Securities even anticipates that China will increase oil prices before the Olympic Games. Once, the rate is not less than 800 yuan / ton.
Affected by the recent upward adjustment in the price of refined oil products, the two oil companies and Sinopec Corp. in the past two days have continued to surge under the broad market. "Look at the stock market to know that the market is expected to have high oil prices." Cheng Xiusheng, director of the State Council Development Research Center pointed out that although the current timing is not suitable to release refined oil pricing, the government may fine-tune refined oil prices to ease the "oil "Absurd" and price hanging upside down.
The increase in the price of diesel-reduced crude oil is expected to increase. In order to curb the “oil shortage†and drastically increase the import of crude oil, the international crude oil price exceeded US$130/barrel on Thursday. The immediate effect of this surge is the extreme tension in China's diesel supply.
Until the evening of May 28, Mr. Feng, the freighter owner from Shanxi to Beijing, had been stranded for two days at the entrance of a PetroChina gas station because trucks did not add diesel. Mr. Feng, anxious, complained: “If the price of oil rises, we can add oil. We would rather go up. Now we can't add oil. We can't transport freight, and the loss is even greater!â€
According to the reporter, the price difference between domestic and foreign refined oil reached 2,000 yuan/ton in the first quarter of this year. The current spread is already close to 3,000 yuan/ton, and the difference between diesel and diesel is nearly 6,000 yuan. As the adjustment of domestic refined oil prices has lagged behind the rise in crude oil prices, the domestic oil refining industry has suffered losses for three consecutive years since 2005.
“The price difference between domestic and foreign countries is close to 3,000 yuan/ton, the enthusiasm of oil refinery producers has been severely suppressed, and the intensification of contradiction between supply and demand has brought direct impact on the transportation, aviation, and agricultural industries, and the economic operating efficiency has also been affected. The government is expected to increase slightly in the near future. Oil prices to ease the contradiction between supply and demand." Cheng Xiusheng pointed out.
Chen Fengying, director of the Institute of World Economy at the China Institute of Contemporary International Relations, believes that under this oil price, the government will not properly increase oil prices, which will have a very negative impact on the transportation industry and agriculture. Chen Fengying believes that given the relatively large extent of oil price inversion now, if the oil price is raised, it will inevitably lead to rising production costs. To prevent it from putting pressure on PPIs and CPIs, the government should adjust them in stages and adopt corresponding subsidy mechanisms. The use of oil, such as agriculture, public transportation, can be subsidized, and it can be used for private vehicles, such as private cars. Private cars are big oil users, but this group of people cannot afford high prices.
Although the price is released or until 2010, the price of oil may rise, but it is still adjusted under the government's price control. When the price of refined oil products can be released, the government can unload the increasingly heavy financial subsidy pressure shouldered by oil prices, but it has become a dilemma.
On May 21st, the market price of oil and gas products may be released at the beginning of June. However, on May 22nd, the National Development and Reform Commission released an announcement on its website to clarify the rumor and stated that it would not release refined oil prices in the short term. The main reason is that the current price of lifted refined oil products is not conducive to controlling CPI.
“The government can not release refined oil prices at this time. The timing is indeed wrong.†According to Cheng Xiusheng, the current international oil prices have been rising due to speculative factors that violate the supply and demand relationship. At this time, the refined oil prices will be released and will be brought to the domestic market. There is a lot of pressure, because of the low cost pressure brought by the low exchange rate of the renminbi, and under high CPI, we must also consider controlling inflation. Cheng Xiusheng believes that at present, the country can only ease the losses in the oil refining industry through tax cuts.
“After the government missed the timing of the low oil price in 2006, the timing of reopening refined oil prices may not be until 2010. By then, the US dollar is expected to be relatively stable, the stock market will stabilize, and the futures market will have less impact on oil prices. The international oil price will be weakened. It is expected that there will be an inflection point. If it can fall below US$100 per barrel and the normal price is between US$60-70 per barrel, the government can release the refined oil price in a timely manner.†Chen Fengying also believes that the current international oil price is high at US$130, and the international hot money. Speculation everywhere, but the realization of the domestic CPI target itself is already difficult, and it is by no means a time to release refined oil prices.
However, Chen Fengying stressed that considering energy conservation and environmental protection, it is only a matter of time before the price of refined oil is released.
Waiting for oil futures If it is difficult to implement refined oil prices in the short term, will China have other market means to solve the contradiction between oil price conflicts and supply and demand?
"On the one hand, raising oil prices will bring inflationary pressures. On the other hand, China's low oil prices have become the culprit for international speculators to drive up oil prices. These dilemmas are actually due to the problems existing in China's oil trading methods. China does not have oil futures. It is destined that China does not have oil pricing power, but can only be exploited by high oil prices in vain," said Han Xiaoping, CIO of China Energy Network.
In Han Xiaoping's view, the oil trades of China's oil companies and oil-consuming enterprises are all in the spot market, and there is no hedging. Companies do not have the right to voluntarily choose to trade, and there is not a diversified market, so that companies can buy stocks. You can buy futures, so companies can only accept high oil prices in the spot market.
Fortunately, China has already started fuel oil futures, and some companies have already made profits from fuel oil futures. “We are doing fuel oil futures. Guangdong's diesel oil is extremely tight. We get fuel oil in the fuel oil futures market, and then we pull it back into Guangdong to re-refining it. Some of it is converted into diesel for supply to trucks, and the remaining heavy oil is used for ships. "A private enterprise owner in Guangdong told reporters.
Han Xiaoping said that unfortunately there was no opening of refined oil futures. In fact, the government can try to open diesel futures first, so that some companies can hedge their pressure on diesel by providing hedging in the futures market.
Chen Fengying also pointed out that if China wants to gain a say in the world energy market, it must push forward in the futures market. Only fuel oil futures are not enough. Only the introduction of crude oil futures can compete for the international discourse right in the energy sector. “But crude oil futures are introduced first. It is necessary for the government to liberalize the price control on the domestic refined oil market and rationalize the domestic and foreign oil prices. This requires a process."
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