The Evaluation Of Oil Vulnerability And The Policy Recommendations Of China

Ever since oil replaced coal as the main source of energy, the oil market has always been in a swing of equilibrium and volatility due to wars, conflicts, crisis, monopolies and natural disasters. Every up and downs of the oil market is a disasters for the importing countries’ economies and national security. Thus, investigating the vulnerability of oil has become extremely important.In this paper, based on extensive research done, to make a comprehensive combing literature and according to the principles of scientific, systematic principle, the principle of clarity, comparability principle, dynamic principle, the principle of indirect, 10 indicators were selected including oil reserve-production ratio, energy diversification indicator, oil import diversification indicator, oil dependency, oil price volatility, primary energy percentage, oil consumption rate of increase, oil consumption rate, carbon dioxide emission rate and unit energy consumption. They were further classified into 4 broad categories:resource factor, import factor, market factor and environment factor. All of the above indicators formed the oil vulnerability evaluation system. Furthermore, by evaluating and comparing the vulnerabilities of oil of U.S., Japan, Germany,China and India using weighted entropy approach, the results showed that China and India’s oil are more vulnerable than that of U.S., Japan and Germany. Typical developed countries demonstrated a declining trend in the extent of vulnerability in oil since 2004 despite a few years’fluctuation. Oil reserve-production ratio, oil dependency, oil import diversification indicator and oil consumption rate are the key factors in determining the vulnerability of China’s oil. At the end of the article, it compares the policies on oil vulnerabilities internationally and that led to the conclusion that China’s policies on oil import and reserves are not yet mature. Thus it recommends that the sources of oil import should be diversified, the development of strategic reserve infrastructure should be accelerated, focus more on natural gas exploration. On one hand, this article creatively used the weighted entropy approach to evaluate the vulnerability of oil to make the results more scientific and rational. On the other hand, the recommendations that this article gave can serve well as a reference for the policy makers.