Researches On China’s Natural Gas Price Reform And Its Impact

As China is in the accelerating stage of urbanization and industrialization, the rigid energy demand growth leads to the greenhouse gas emissions, haze, etc. Besides, China faces the enormous pressure to prevent the atmospheric pollution at home and reduce carbon dioxide emissions abroad. The rising oil dependency has greatly threated national energy security. However, coal utilization has been restricted due to the environmental pressures, and under the constraint of technological level, new energy could only be a supplement to the conventional energy. Therefore, in the context of low-carbon economic development, natural gas, an efficient, clean and superior energy, is gaining more and more attention during the particular period of the great transformation of energy and environment. Especially, the development and large-scale application of shale gas have led to a global "gasification revolution", and gas would usher in the golden age of development. The percentage of natural gas in primary energy structure is less than5%in China and there exist a series of problems such as the price monopoly, the excessive price controls, the inversion of price gradient, the unreasonable price ratio to the alternative energy and the irrational price structure of the industrial chain. Therefore, in order to guarantee a long-term supply of natural gas, it is imminent to promote the development and competition in natural gas industry, straighten gas prices, and conduct price reforms to promote the upgrade of gas industry, ensure the equilibrium of natural gas market and China’s energy security and realize the development of low carbon economy.In this paper, we comprehensively analyze the present situation of natural gas development at first, including the distribution, production, consumption, import and export and development trend; besides, we present all the relevant policies in recent years. We further take the experiences of natural gas price reforms in foreign countries for reference and analyze natural gas price reform in China vertically and horizontally. Specifically, we focus on the contents and effects of the reforms implemented in Guangdong and Guangxi provinces and the promotion of the nationwide reform. Based on the development of China’s natural gas price reform and the empirical analysis, we find that the reforms from December2005, to a certain extent, has strengthen the long-term responses of domestic natural gas prices to the international crude oil prices, which has thus promoted the establishment of the price mechanisms of oil and gas. Taking the industrial association and the chain effect of prices into account, we further use I-O Model (Input-Output model) to analyze the influence of the natural gas price adjustment. We conclude that the urban citizens are most impacted, followed by the industrial production, and the rising natural gas prices would drive up price indexes at different levels. However, the overall impact is small. Finally, we use the price-gap approach to estimate the scale of gas subsidies during2010-2012under different conditions and in different economic sectors.Finally, the article puts forward suggestions on the basis of empirical analysis:(1) Strengthen the aspects of making China’s natural gas strategic deployment and demand forecasting;(2)further improve the current market value method and the price mechanism corresponding to the alternative energy;(3)conduct targeted price reforms in each link from the perspective of industry chain to promote the marketization and integration of the up, middle and down stream of prices;(4)take the reasonable supporting measures and fiscal and taxation policies into account during the reform;(5)further improve the supporting measures such as the related laws, regulations and the price hearing system;(6)gradually promote the marketization process of the whole system of energy prices.