On May 9, domestic refined oil prices will usher in a downward adjustment. According to the authoritative forecast, gasoline and diesel prices will be reduced by about 0.15-0.17 yuan/liter respectively. This adjustment will bring the price of refined oil products back to a relatively low level on the mainland. The value of this adjustment has our attention and analysis.
The reason for the price adjustment
The main reason for this price adjustment is that international crude oil prices have fallen recently. The main factors that affect the price of crude oil are:
1. Economic growth is slowing and demand is weak
As the global economy slows, so does the demand for crude oil. In particular, the lack of economic dynamism in regions such as China and Europe has dragged down the demand for crude oil.
2. Overproduction
In order to maintain their market share, some oil-producing countries still insist on high production during the downward cycle of crude oil prices, resulting in oversupply. In addition, the extraction of unconventional oil and gas such as shale oil continues to increase.
3. Geopolitical factors are suspended
Although the geopolitical situation in the Middle East is uncertain, there have been no major disruptions to crude oil supply for the time being.
4. The dollar strengthened
The recent continued strength of the U.S. dollar index has led to a relative depreciation of dollar-denominated crude oil, which has dragged down crude oil prices.
Domestic oil price adjustment mechanism
The adjustment of the price of refined oil in the mainland follows the principle of "ensuring reasonable profits, being in line with international standards, and being conducive to environmental protection", and decides whether and how much the price of domestic refined oil is adjusted every 10 working days according to the average price level of international oil types such as Brent and Fateh in the North Sea in the cycle cycle.
The adjustment of domestic oil prices has a lag. This is because the mainland's strategic oil reserves are mainly concentrated in Northeast China, North China and other regions, and the transportation cycle is long, and if it is adjusted with the fluctuation of international oil prices at any time, it will inevitably cause huge business risks. At present, the strategic oil reserve is about 9 million tons, which can be guaranteed for 90 days.
Analysis of the impact of this price adjustment on the economy
1. Pull down inflationary pressures
The reduction in oil prices will directly reduce the cost of production and circulation, curb the rise in the cost of living for residents, and play a positive role in maintaining the overall stability of the price level.
2. Stimulate residents' consumption
By cutting the cost of using cars, this will free up more disposable income for residents, thereby stimulating the release of consumer demand.
3. Increase the pressure on logistics and transportation costs
Although the reduction in oil prices will save on automobile fuel costs, it may also prompt logistics and distribution companies to speed up the launch of automobile transportation capacity, so that they cannot fully absorb the dividends of cost reduction.
4. Affect the profit space of the enterprise
At that time, the sales revenue and profit margin of gas stations and refining and chemical enterprises will be under certain pressure.
5. Pull down the cost of industrial production
Many industries are highly dependent on oil products for production and transportation, and lower oil prices can help reduce their operating costs. However, there is a lag in the release of dividends.
On the whole, the benefits of this round of oil price adjustment outweigh the disadvantages, and it will play a positive role in the stable macroeconomic growth of the mainland.
The mainland's energy structure continues to be optimized
In recent years, the mainland has continued to promote the energy revolution, vigorously develop renewable energy, and continuously optimize the energy structure. In the power sector alone, clean, renewable energy generation has surpassed the share of fossil fuels. In 2023, the utilization of renewable energy such as wind power and solar energy in mainland China will reach a new height.
At the same time, the mainland has vigorously improved energy efficiency and accelerated the pace of transformation and upgrading. In the future, the proportion of traditional fossil energy will continue to decline, clean and renewable energy will become the main force, and the entire energy structure will be greener and more low-carbon.
Prospects
Looking ahead, the global crude oil market will remain tightly balanced. In the medium term, the outlook for demand-side economic growth is not optimistic, but the release of supply-side production capacity is still subject to uncertainties in all aspects. Factors such as geopolitical risks, trade disputes, and extreme weather in the Middle East can disrupt supply and demand.
As the world's largest importer of crude oil, the mainland will continue to promote the exploration and development of domestic oil and gas resources to ensure supply security. At the same time, under the guidance of the concept of green development, the proportion of clean and low-carbon energy in the mainland's overall energy consumption will increase year by year.
In short, although there are many uncertainties in this round of oil price adjustment, the benefits outweigh the disadvantages, which is conducive to the stable operation of the real economy and the smooth management of domestic inflation expectations. We will continue to monitor the follow-up for an in-depth analysis of the relevant trends and impacts