How far are we from the oil price ceiling after oil prices have risen for ten consecutive years?

Oil prices have risen again.

According to the notice from the National Development and Reform Commission, starting from 0:00 on June 15, the price of gasoline will be increased by 390 yuan per ton, and the price of diesel will be increased by 375 yuan per ton. After the price adjustment, the price of No. 95 gasoline in Guangdong, Hubei and other places exceeded the 10 yuan per liter mark for the first time.

This is also the tenth domestic price increase since 2022, and many private car owners have also personally felt the surge in oil prices.

Taking an ordinary private car with a fuel tank capacity of 50 liters as an example, it would cost more than 100 yuan to fill a tank of gasoline compared to a year ago. If you refuel 3 times a month, you will save extra money for eating out.How far are we from the oil price ceiling after oil prices have risen for ten consecutive years? -How-far-are-we-from-the-oil-price-ceiling-afterHow the Russian-Ukrainian conflict affects our wallets

As a country that needs to import more than 70% of crude oil, China’s oil prices are deeply bound to international oil prices. The direct reason for the record-breaking domestic oil price is also the surge in international oil prices.

And boosting this round of global oil prices is the conflict between Russia and Ukraine that has lasted for more than three months.

As the world’s largest exporter of natural gas and the second largest exporter of oil, Russia occupies an important position in the global oil and gas supply chain. After the conflict began, the United States and other countries launched multiple rounds of sanctions, including a ban on imports of Russian oil. This broke the previous balance of supply and demand, and international crude oil prices began to rise all the way.

In fact, looking back at the reasons why international oil prices have exceeded 100, they are all closely related to the war.How far are we from the oil price ceiling after oil prices have risen for ten consecutive years? -How-far-are-we-from-the-oil-price-ceiling-afterTake 2011 as an example. At that time, the second largest oil producer in Africa, the oil production cut after the situation in Libya continued to be turbulent, became the biggest catalyst for the international oil price to break through US$100.

At the same time, the duration of the previous two surges in international oil prices is not short, and the time that international oil prices are at a high level this time may not be too short.

According to the analysis of Everbright Securities in the mid-term investment strategy of the petrochemical industry in 2022,As the global crude oil supply and demand continues to be tight, coupled with geopolitical premiums, high oil prices will continue throughout the year.

Will oil prices go up indefinitely?

Although domestic oil prices and international oil prices are in a state of step-by-step in most cases, domestic oil prices will not rise “infinitely” with the fluctuations of international oil prices.

Different from the market-based pricing model of European and American countries, the domestic oil price formation mechanism includes both market-based components and government-regulated components.

According to the “Measures for the Administration of Petroleum Prices”, when the international oil price continues to rise, but does not exceed US$130 per barrel, the domestic refined oil price will be adjusted normally according to the mechanism; if it is higher than US$130 per barrel, the price of gasoline and diesel should not be raised in principle. price or less.How far are we from the oil price ceiling after oil prices have risen for ten consecutive years? -1655298399_855_How-far-are-we-from-the-oil-price-ceiling-afterIt should be pointed out that this price mechanism was introduced in May 2009. Prior to this, domestic oil prices did not necessarily fully echo international oil prices.

According to Shangguan News, the international crude oil price in 2008 was once close to US$150. At the same time, the price of No. 93 gasoline in the Shanghai market was just over 6 yuan.

In addition to how to set the price, the “Oil Price Management Measures” also stipulates that when the moving average price of crude oil in the international market for 22 consecutive working days changes by more than 4%, the domestic refined oil price will be adjusted accordingly.

In 2013, the National Development and Reform Commission further improved the pricing mechanism for refined oil products, shortening the price adjustment cycle to 10 working days, and abolishing the upper and lower 4% limit, making domestic oil prices more sensitive to international oil prices.

However, the domestic retail price of refined oil is not only determined by crude oil, but also by the influence of taxes and fees in circulation.The so-called circulation tax mainly includes value-added tax, consumption tax, urban maintenance and construction tax and education surcharge, which together account for about 40%.

“Government departments levy consumption tax on refined oil. On the one hand, it uses tax levers to increase oil prices, so as to control the total consumption and achieve the effect of protecting the environment, saving energy and reducing emissions; The role of the non-renewable resource, such as oil, is to protect the financial revenue,” Shi Zhengwen, director of the Finance and Taxation Law Research Center of China University of Political Science and Law, said in an interview with the media.How far are we from the oil price ceiling after oil prices have risen for ten consecutive years? -1655298400_218_How-far-are-we-from-the-oil-price-ceiling-afterThe relevant person in charge of the Ministry of Finance and the State Administration of Taxation previously stated that the level of tax burden on refined oil depends on a variety of factors, which is in line with the resource endowment, economic development level and environmental protection requirements of each country.

Internationally, the United States has the lowest tax burden on refined oil products in the world, accounting for 12% of gasoline, while EU oil products have a heavier tax burden, accounting for 56%. Some countries closer to China also have different taxes on refined oil—42 percent in Japan and 52 percent in South Korea.

In addition, in terms of oil prices, the oil prices in mainland China are still in the middle of the global ranking.According to data released by GlobalPetrolPrices on June 13, among 170 countries or regions in the world, the gasoline price in mainland China ranks 79th, which is similar to the global average price.

Everyone will pay for it

Although car owners are the first to perceive after the rise in oil prices, they are never the only ones who have to pay for it.

Oil is an important basic energy source and fossil raw material in the modern economy. Rising international crude oil prices will increase the cost of many downstream industrial chains. This pressure will be transmitted to the final consumer prices. This means that the continued rise in oil prices will increase the price level to a certain extent.

Taking food, clothing and housing as an example, daily clothing fabrics such as nylon, polyester and other synthetic fibers come from raw materials produced by oil; oil is one of the raw materials for nitrogen fertilizer, the most important component of fertilizers. Rising oil prices will drive up the price of fertilizers, which will lead to the cost of agricultural production. increase and push up food prices; and in terms of housing, petrochemicals directly affect the expenditure of water, electricity and fuel costs.How far are we from the oil price ceiling after oil prices have risen for ten consecutive years? -1655298401_67_How-far-are-we-from-the-oil-price-ceiling-afterHowever, Lin Boqiang, director of the China Energy Economics Research Center of Xiamen University, said in an interview with the media that compared with Europe and the United States, the increase in crude oil prices has not had much impact on my country’s economy. Because oil accounts for less than 20% of China’s overall energy, while in the overall energy system of European and American countries, oil and gas accounts for more than 60%.

This also explains why the rise in crude oil prices will have varying degrees of impact on the consumer price index (CPI) in China and the United States.

According to estimates, if crude oil prices rise by 10%, China’s CPI will rise by 0.026 percentage points, while the US CPI index will be pulled by 0.049 percentage points.

Huge inflationary pressures have also led US President Biden to target big oil companies recently, accusing them of taking advantage of the global oil supply shortage to make crazy profits.

But no one can tell when the big inflation that has affected the world will end.

As the United Nations has warned, this time, the Russian-Ukrainian conflict, which has caused oil prices to soar, will cause food and energy price shocks that will last for several years. If the conflict between Russia and Ukraine is protracted, and the sanctions imposed on Russia by countries such as Europe and the United States continue to increase, the price level may rise further.

(This article is from CIC, for more original information, please download the “CIC” APP)

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