COMING CHANGES IN CHINESE OIL PRODUCTS PRICING
Changes are imminent in the pricing of refined products in China. On the heels of recent price reforms in other sectors, regulators may soon announce changes to how diesel and gasoline prices are determined.
- Supply shortages and financial losses in the refining sector-consequences of the current pricing system-have become a major concern of the central government and may further worsen in 2006 unless addressed soon.
- The new price system will aim to correct the distorted price relations between crude oil and refined light products, but is unlikely to bring domestic diesel and gasoline prices to import parity levels.
- The new pricing system will likely provide needed stability to the Chinese oil market by returning margins to sustainable levels and perhaps staving off a new round of diesel shortages later this year.
