Analysis On Administrative Monopoly In Structure Of China Petroleum Industry

For the great strategic significance of oil and petroleum industry, China has always taken a strict administrative control on petroleum industry. Since the three major oil companies reorganized in 1998, the competition has introduced into China's oil industry for the first time. For nearly 10 year development after reorganization, the new market structure has been formed, and the competition has been enhanced as well as new problems have emerged. The high-income of employee in petroleum industry has been taken greater attention now; the prices of refined oil rose for several years; "oil shortage" problems arise even often; private refineries and gas stations has less living space. After joining the WTO, China's petroleum industry open to the world gradually, the industry had no choice but to speed up the process of liberalized. By the end of 2006, the wholesale market of refined oil has been fully opened to the whole globe. From then on, private and foreign capital has been allowed to enter the wholesale and retail market, crude oil refinery and petrochemical industry also raised access conditions on the domestic capital. But the market of oil exploration is still been monopolized by several companies, and the prices of oil which decided by market can not be realized. In recent years, China's dependence on foreign oil rose persistently, and in 2006, this number reached 47 percent. China's oil security issue is no longer just confined to one country but to the whole world. The monopoly on the exploitation of oil enable the three major oil companies maintain high profits easily and consequently made it impossible to a fair market and price policy development. Also, it made they lack of impulse in improving technology, lower their costs, the ability to avoiding risk, and it is difficult for them to withstand the test of an opened market.By the method of administrative monopoly, observing the change of structure of china's petroleum industry, entry barrier, especially by the tracking of the change on market structure after the reorganization of china's petroleum industry, we can find out the cause of how these problems occurred in the aspect of structure. Then policy can be recommended, and the theoretical basis can be provided as well in the policy making of access to oil exploitation market. After reformation in 1980's and 1998, the structure of china petroleum industry is seen as monopoly in exploitation and competition in refining and selling. By analyzing the transformation and structure and entry barriers in china's petroleum industry, this article aimed to find out the influence by administrative monopoly and how it conducts. At last, we make the conclusion that the administrative monopoly in exploitation causes oil lack and other problems in petroleum industry.