Marketization is an inevitable choice for China's petroleum policy

With the continuous rise of international oil prices, China's current oil price policy is facing an increasingly severe test. The negative impact caused by price control can not but arouse our great attention.
The relatively low price of China’s oil will, to a certain extent, affect the implementation of the “energy saving and emission reduction” policy. As the scarcity of oil resources is expected to increase, the use of maximum savings of oil resources has become the consensus of all countries in the world. China, as a developing country with rapid economic growth, has on the one hand greatly increased its demand for petroleum resources. On the other hand, there is a big gap between the efficiency of the use of petroleum resources and that of developed countries, which makes it necessary for China to save oil resources. Use more efforts. There are many ways and means to save various resources, including oil. The most fundamental and effective means is marketization. If China can lift the oil price control and get in line with international standards, it will certainly play a significant role in promoting the use of oil resources.
As a basic energy source, petroleum has a great impact on many industries and companies. The rise and fall of its prices directly affects the level of operating costs of these industries and enterprises. One of the negative effects of the relatively cheap oil price under the control of the policy is that some construction projects that are not economically sound are also profitable and have been launched one after another. As a result, not only have the costs increased, including oil. The depletion of various related resources, but also the rationality of the entire economic layout has been destroyed. Because the flow and distribution of social and economic resources are not entirely in accordance with the internal requirements of marketization, the decline in overall social welfare is inevitable.
The control of oil prices will also exacerbate rather than ease the contradiction between supply and demand in the market to a certain extent: On the one hand, oil demand will increase due to the relatively low price, and on the other hand, oil supply will be limited by the loss of the interests of producers. In the case of contradictions in domestic supply and demand, the contradiction should have been reduced by increasing imports and suppressing exports. However, the actual situation is the opposite: oil demanders lack the enthusiasm for importing oil because of the high international oil prices. Oil suppliers tend to export oil because the domestic market price is lower than the international market. In this way, through the import and export trade, the domestic oil supply and demand relationship does not tend to ease but is further strained.
The tight supply of oil has caused oil shortages in different areas in some areas. The phenomenon of being unable to add oil and platoons in time to add oil has repeatedly occurred. This phenomenon has caused the local social and economic life to pay for the costs, and we cannot Small vision.
State-owned oil companies represented by China National Petroleum Corporation suffered huge losses of profits during the country’s oil price control. From the perspective of social responsibility, this is an enterprise must accept. However, since China National Petroleum Corporation and other companies have already listed and become public companies, we must not consider only large shareholders, but we must also consider thousands of small and medium investors. Simply allowing these companies to sacrifice their own interests for the sake of social and public interests is actually an infringement of the small investors. We cannot rely on policy measures to curb the prices of these companies for a long time. Otherwise, investors can only safeguard their own interests by “voting with their feet”. This is not a good thing for these companies and the entire securities market.
Relatively low-cost oil will reduce the prices of downstream products to a certain extent. When a large number of cheap products are exported to foreign countries, foreign consumers who are actually equal to these products enjoy the oil subsidies of the Chinese government. As for those Foreign companies in China have even been using relatively low-priced oil in our country and have directly felt the benefits of oil subsidies. Obviously, such indirect foreign oil subsidies are also a huge loss of profits for our country.
It can be seen from the above that the negative effects of oil price control are multiple, and therefore, the realization of the marketization of oil prices is a general trend. The reason why the reform of China's oil price system was repeatedly postponed was mainly because the central government is worried that if the CPI remains high, liberalizing oil prices will further aggravate inflation. This is indeed a problem that cannot be ignored.
With regard to China’s oil prices, it can now be said that the time has come for a final decision. Oil price control can only be used for a short time. Faced with the objective situation of a general and substantial increase in resource prices in the world, it is our government’s wise choice to follow the trend.

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