Research On China Oil Demand Based On Simultaneous Equation Model

Energy, especially oil is essential to human survival, economic development, social progress and modern civilization, which plays a great and foundational role in national economy and national security.We focus on the consumption and self-supply situation of China oil industry, and its regulation history, from which we draw main factors influencing the industry consumption and supply to build a simultaneous equation model. With the method of 3-Stage Least Squares estimation, we work out the model, and get price elasticity and income elasticity of oil demand, and find that regulation policies influence its demand and supply significantly.The stable growth of national economy depends more on fast growing demand of oil, but half of oil consumption depends on imports form other countries. It will certainly lead to the issue of oil security. We make a brief describe of oil security and introduce in 3 Indicators to measure it. Indicators of days for emergency from oil strategic reserves and importing concentration, find oil security relieved slightly. But indicator of dependence degree on foreign oil increases rapidly, showing oil security in a more severe situation.After forecasting demand and supply in different scenarios, we find our demand will rely on oil imports more and more, with dependence degree rising to about 66%, which makes national oil security more and more pressing.Based on the findings, we make some policy recommendations, such as price reform and oil strategic reserves to keep sustainable development of China's economy.