Southern Press News
Date: December 22, 2008
Source: Southern Metropolis Daily
Data Picture
■ Broadcast
Low Oil Prices Not Linked to International Markets
On November 24, 2008, Sina Finance reported that Han Wenke, Director of the Energy Research Institute of the National Development and Reform Commission (NDRC), stated that China would not establish a mechanism for linking domestic refined oil prices with international crude oil prices. Additionally, Han predicted that the upcoming Central Economic Work Conference at year-end would release more policies to stimulate the economy. The currently sluggish domestic energy demand in China would gradually recover as a result, with signs of warming expected by the second half of next year. "But it is definitely impossible to return to the level of double-digit annual growth in energy consumption seen three or four years ago," he said. Regarding the establishment of a real-time linkage mechanism between domestic refined oil prices and international crude oil prices, Han Wenke indicated that such a mechanism would not be established in the short term. The underlying implication of the linkage mechanism is that prices would align completely with international crude oil prices. However, as a developing country, China cannot realistically align all its prices with international standards.
As for how to rationalize energy prices, Han Wenke believes that prices will be determined by market forces. In terms of specific price formulation, it is necessary to ensure harmonious relationships among the state, enterprises, and consumers. During the recent period when energy prices were high, domestic energy companies were operating at a loss. To achieve harmony among the state, enterprises, and consumers, some of the eventual price changes might be passed on to consumers, while others would require the state or enterprises to sacrifice some profits.
High Oil Prices Must Align with International Standards
On January 4, 2008, the International Business Times reported that international oil prices broke through the $100 mark for the first time on January 2, 2008. Han Wenke, Director of the Energy Research Institute of the NDRC, stated that the likelihood of a short-term decline in oil prices was small, and high oil prices could persist for a long time. It is necessary to study the issue of introducing a fuel tax under the backdrop of high oil prices. Han Wenke noted that high oil prices have a certain negative impact on China's economic development and people's lives but are insufficient to affect the fundamental basis of sustained and rapid economic development in China. High oil prices mainly affect industries that consume large amounts of oil, squeezing their profit margins and possibly leading to losses or even bankruptcies in some industries or enterprises.
Han Wenke pointed out that the current pricing mechanism for refined oil in China still requires further reform and improvement, necessitating closer alignment with international markets, accelerating the transmission of price signals, and further leveraging the market's role in regulating the supply and demand of oil products. Simultaneously, a pricing mechanism conducive to energy conservation and environmental protection should be formed. Under the backdrop of $100 oil prices, domestic fuel tax reform has undoubtedly become one of the focal points of public discussion. Han Wenke stated that from the perspective of encouraging oil conservation and equitable burden-sharing, as well as enhancing the use of fiscal and taxation measures to regulate oil consumption, China should introduce a fuel tax as soon as possible. He believed that China's fuel tax involves both the reform of replacing fees with taxes and the embodiment of national basic policies. Therefore, the timing of its introduction needs specific research. However, given that high oil prices may persist for a long time, we cannot wait indefinitely and must promptly study the issue of introducing a fuel tax under the backdrop of high oil prices.
□ I've finally understood this clearly: whenever money is taken from the pockets of ordinary citizens, it always aligns with international practices; however, whenever there are benefits or welfare for the people, they never align with international practices. Taking things out of context, there's no way around it—losses outside the dike must be compensated within the dike. Chinese citizens truly suffer, having to continuously pay for the corruption, incompetence, empty lies, and irresponsibility towards people's livelihoods and society exhibited by officials.