Application Of EaR In Risk Management Of Petroleum Market In China

Petroleum,which is a non-renewable and scarce resource,is very important to the development and security of the national economy.As the economy grew rapidly in China in recent years,the domestic oil production can't meet the growing oil demand any more and the oil dependency on other countries increased substantially. China became the second largest oil net import country from 2003 after it surpassed Japan.At the same time,the international oil price fluctuated frequently in recent years.Especially in 2008,it touched the highest level in the history and then fell to the lowest level of the nearest five years.Therefore,the in-depth research of the petroleum market risk management is significant to avoid the risk of oil price fluctuation for enterprises and ensure the continuous healthy,rapid and steady growth of our economy theoretically and practically.In this paper,it is the first time to apply EaR risk management theory to the oil market.We make an empirical research about PetroChina Company Limited as an example.The result shows that the EaR method is a very effective method to measure the risk of the oil market.The company can take preventive measures to avoid potential losses before they happen and control and manage the risk of oil price fluctuation more effectively.Finally,we analyze the problems of China's oil security qualitatively and give some suggestions for China's oil security from the aspect of "quantity","price" and "quality" after we take into account advanced management modes of foreign countries.