(CCTV, Sept 18, 2006) -- Global crude oil prices have been dropping since mid-July. Domestic consumers wondering how that may affect domestic prices.

A researcher from the National Development and Reform Commission says domestic refined oil prices generally should be higher than the world crude oil prices. However, although global crude futures have dropped to 63 US dollars, domestic refined oil prices are in fact much lower. They are set around 40 to 50 US dollars.

Gao Shixian, Researcher of Energy Sources Institute of NDRC said: "If domestic refined oil prices reflected the global refined oil prices, they would be higher. However, current prices are due to government macro-control measures."

The current refined oil price fixing mechanism in China are based on crude oil prices in New York, London and Singapore. Only when the weighted average price range of crude oil is higher than eight percent, then the domestic refined oil prices would be adjusted. But the adjustment would be delayed between 1 to three months. Experts say the price mechanism is one of the major reasons that domestic refined oil prices have not significantly changed. In addition, domestic demand is increasing. Therefore, even though the global crude oil price is dropping, refined oil prices in China will likely remain the same because of high demand.
Source:CCTV
tag:China energy oil