Learn mandarin - Is market-driven oil pricing mechanism the Holy Grail?

BIZCHINA / Opinions

Is market-driven oil pricing mechanism the Holy Grail?

By Wang Yu (China Daily)
Updated: 2007-02-01 13:17

Is a more market-oriented oil pricing mechanism the Holy Grail to
eliminate refiners' deficits and fuel further economic growth? Probably
not.

The National Development and Reform Commission (NDRC) recently said that
a more flexible oil pricing system has "stealthily" taken effect,
designed to better tune local oil product prices to reflect the
international one.

In reality, however, the authority still finds it hard to balance the
interests of all parties using the new mechanism.

Why? The reason is self-evident: the new system is still subject to
official mandates and artificial adjustments.

The NDRC has been reported to be seriously thinking of removing the price
peg between local and international oil products and instead linking
local prices to global crude oil prices.

The top economic planner had never officially confirmed the news until it
was made clear this week that domestic oil products have long been priced
on the average international crude oil price, plus costs and adequate
profits for refineries.

1 2 

(For more biz stories, please visit Industry Updates)

Learn mandarin