Domestic refined oil product prices are set for an adjustment at 24:00 on May 8th. In the current 10-working-day statistical cycle for fuel prices, data collection for three working days has been completed. Influenced by the recent consecutive sharp increases in international oil prices, the price trend has shifted from a decline to an increase. The current crude oil change rate exceeds 1.16%, indicating an expected price hike of 100 yuan per ton. Based on the current increase rate, gasoline and diesel prices are projected to rise again by 0.08 to 0.09 yuan per liter.
The significant volatility in international oil prices recently has drawn public attention, leading many to question how China's domestic refined oil product prices are adjusted. The mechanism can be understood by focusing on two key aspects.
First, prices are linked to international oil prices. According to the domestic refined oil product pricing mechanism, the maximum retail prices for gasoline and diesel are based on international market crude oil prices and are adjusted every 10 working days. It is important to note that domestic gasoline and diesel prices are pegged to the average price of a basket of international crude oils, meaning the price adjustment is influenced by multiple international crude oil prices, not just one. The magnitude of the price adjustment is not simply determined by the price change of crude oil at specific points or over a few days. Instead, it depends on the comparison between the average price of the basket of international crude oils over the 10 working days preceding the adjustment and the average price over the 10 working days preceding the last adjustment.
Second, a price band mechanism is implemented. When the average price of the basket of international crude oils over the 10 working days before an adjustment exceeds $130 per barrel (commonly referred to as the "price ceiling," corresponding to an average retail price for domestic 92-octane gasoline slightly above 10 yuan per liter) or falls below $40 per barrel (the "price floor"), the state will implement price control measures. Articles 6 and 7 of the "Petroleum Price Management Measures" provide detailed regulations for this band control. Article 6 specifies that when the international oil price is below $40 per barrel, domestic refined oil product prices will not be further reduced; when it is above $130 per barrel, prices will, in principle, not be increased or will see only minimal increases. Article 7 also states that in special circumstances, such as abnormal fluctuations in international market oil prices, refined oil product prices can be controlled. These regulations balance the interests of consumers and producers, helping to prevent sharp rises and falls in domestic refined oil product prices due to significant volatility in international crude oil prices.
Previously, in 2022, when international oil prices surged significantly due to the Russia-Ukraine conflict, the National Development and Reform Commission clarified that once the international oil price breached the upper control limit of $130 per barrel, domestic refined oil product prices would not be increased in the short term (for no more than two months), and phased subsidies would be provided to refining enterprises. Experts believe that the previous temporary control measures on domestic refined oil product prices helped mitigate the impact of excessively rapid increases in international oil prices, alleviated the burden on downstream users, and ensured stable economic operation and social livelihood.
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