Oil pricing system gets adjustment

Updated: 2013-03-27 01:39

By LAN LAN (China Daily)

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A more market-based pricing mechanism is good for consumers' interests through market competition, said Wen Guifang, an economist at the Institute of Finance and Trade Economics at the Chinese Academy of Social Sciences.

Wen said in the long run, oil prices will continue to rise. As the world's second-largest oil consumer after the United States, China has seen increasing dependence on imported oil, which has threatened its energy security.

That dependence is expected to reach 59.4 percent in 2013, according to a report released by the Economics and Technology Research Institute of China National Petroleum Corp.

Many analysts said the commission has acted quicker than expected.

Zhang Ping, the former chairman of the commission, said this month that China is moving to reform the oil pricing mechanism.

Han Jingyuan, an energy analyst with JYD Online, a bulk commodity consultant based in Beijing, said it is better to launch the new system when oil prices are low.

Crude oil prices on the international market continued to fall in the past few weeks, and the international oil price is likely to keep dropping, she said.

The 22-day moving average price of Brent, Dubai and Cinta on Monday was 5.12 percent lower than the level when China last adjusted fuel prices, said Han.

Eased domestic inflationary pressure also means it is a good time for the commission to launch the new system.

Lu Zhengwei, chief economist with Industrial Bank Co Ltd, said inflation is not an immediate problem and he forecast growth of the Consumer Price Index will continue to fall to about 2.2 percent in March.

The index rose 3.2 percent in February year-on-year. A 10 percent cut in oil prices usually leads to a 0.1 percent fall in the index.

Since February 2011, China has adjusted fuel prices 13 times, with seven increases and six cuts.


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