Oil prices break 9!Why are domestic oil prices still rising when they reach the ceiling?

2022-07-05 0 By

On March 17, the domestic oil price of finished products rose by the largest amount since the new pricing mechanism, and gasoline 95 strode into the “9 yuan era”.However, many people wonder why domestic oil prices have risen even as international crude oil prices have fallen.Why should prices rise when they have reached a ceiling?This starts with China’s price adjustment mechanism for refined oil products.According to article 7 of the Petroleum Price Control Measures, the price of gasoline and diesel oil shall be adjusted every 10 working days according to the change of crude oil price in the international market.The price adjustment will take effect at 24:00 on the date of release.When the price adjustment range is less than 50 yuan per ton, no adjustment will be made, and it will be included in the accumulation or offset of the next price adjustment.When it is necessary to regulate the price of refined oil products under special circumstances such as a significant increase in the overall domestic price level or a major emergency, abnormal fluctuations of international oil price, the National Development and Reform Commission may, after reporting to and agreeing with The State Council, suspend or postpone the price adjustment or reduce the range of price adjustment.When adjusting the domestic refined oil price every 10 working days, the reference crude oil price is not the change of oil price in the days before the adjustment, but the comparison between the average international oil price in the 10 working days before the adjustment and the average international oil price in the 10 working days before the adjustment.(▲2022 domestic refined oil price adjustment time, from January to now, 5 times of price adjustment are up) Due to the international oil price fluctuations every day, domestic refined oil price adjustment only once every 10 working days, which often appear two “illusion” :International oil prices fell before the adjustment date, but domestic oil prices increased. For example, the latest oil price hike (March 17) took place several days before the adjustment, but domestic oil prices still increased on the day of the adjustment.This is because: the average value of the past 10 working days is still significantly higher than the previous level.For example, on the price adjustment day of December 17, 2021, the international oil price rose continuously for the two working days before, but the domestic gasoline and diesel prices decreased by 130 yuan and 125 yuan per ton respectively.● Key point 2: when the price adjustment range is more than 50 yuan/ton, the adjustment range of domestic oil price will be adjusted based on 50 yuan/ton. When the rise and fall of crude oil is less than 50 yuan/ton, the retail price will not be adjusted (i.e. stranded) and will be included in the next price adjustment accumulation or offset.For example, if the international crude oil price increases by 49 yuan/ton during this adjustment period, the domestic oil price will not be adjusted this time.The 49 yuan/ton increase will be included in the accumulation of the next price adjustment;If the crude oil price increases by 1.1 yuan/ton in the next price adjustment cycle, the domestic oil price will be raised in the next round.Because add last cycle 49 yuan/ton, the total accumulative crude oil rose 50.1 yuan/ton, has exceeded 50 yuan.There are ceiling and floor prices for domestic oil prices, which are adjusted according to the international oil market.That is: oil prices can’t be infinitely low, and they can’t be infinitely high.According to article 6 of the Petroleum Price Control Measures, when the price of crude oil in the international market is lower than 40 USD per barrel (inclusive), the price of refined oil shall be calculated according to the price of crude oil at 40 USD per barrel and the normal processing profit rate.When the price is higher than us $40 per barrel and lower than US $80 per barrel (inclusive), the price of refined oil shall be calculated according to the normal processing profit rate.Above $80 per barrel, the processing margin is deducted until the product price is calculated as zero processing margin.When the price is above us $130 per barrel (inclusive), appropriate fiscal and tax policies will be adopted to ensure the production and supply of refined oil products in accordance with the principle of taking into account the interests of producers and consumers and maintaining the smooth operation of the national economy.In short: ● No mention or little mention of crude oil prices > $130 / BBL (note: “little mention” does not mean no mention);● Crude oil price < $40 / BBL: no reduction;● Crude oil price between $40 and $130: normal adjustment, the rise is up, the fall is down.In 2008, when international crude oil was 147 dollars per barrel, China's oil price was 6.3 yuan per liter.In 2015, when the international oil price was 43 dollars per barrel, China's oil price was still 6.3 yuan.On July 3, 2008, the international oil price reached the all-time high of 146.08 DOLLARS per barrel, and the European Union price per liter was about 14.8 yuan, while the price of no. 93 gasoline in Beijing was 6.2 yuan per liter.This is because: from 2003 to 2008, the pricing of domestic oil products was mainly controlled by the state and was in a state of "decoupling" from the international price.Taking into account the consumption level of domestic people, the country deliberately lowered the oil price, and did not let the domestic oil price rise sharply with the international oil price.02 Now: Getting in line with international oil prices is different now.The first is the pricing mechanism, more in line with the international oil price;Secondly, the price adjustment cycle of refined oil pricing mechanism is shortened (every 10 days), and the price adjustment is frequent. The correlation with crude oil is further enhanced and the marketization degree is higher.So there is not much comparison between today's oil prices and those of 2008.Yi jie said that the sixth oil price adjustment will start on March 31 (this Thursday). According to the recent trend of international crude oil price, although it dropped sharply at the beginning, it failed to maintain, has "changed from decline to rise", and now the drop is more than 100, the adjustment is coming, it seems that the oil price will not fall.But until the day of adjustment, no one knows for sure.