Present And Future Of China's Refined Oil Pricing Mechanism

As a kind of commodity, petroleum price fluctuates according to the law of supply and demand. While petroleum is also a kind of special commodity, it determines the complexity of its supply curve and demand curve. Influenced by its no reproducibility, generally the supply curve of petroleum is characterized with negative slope. The price elasticity of short-term demand of petroleum is very low. Due to influence of other alternative energy, its price elasticity of long- term demand is relative higher than that of short-term. The complexity of its supply curve and demand curve determines the unstable oil price or frequent price fluctuation.Research concerning the characteristic of supply and demand of petroleum provides significant importance to frame national petroleum policy. Because of congenital defect of petroleum market mechanism of China, the price of oil product can only be controlled by nation. And too much problem is born under such mechanism. The effective measures to resolve these problems include is: borrow ideas from international experience and combine the actual situation of our country, to establish perfect modern market system of product oil focusing demand and supply of product oil in the initial stage. The objective is to make our product oil market virtually connected with international market.