Economic observation: Who should listen to the oil price adjustment?

Editor's Note: The long-anticipated prophecy of "domestic oil prices plunging" has finally been shattered by the reality of rising global oil prices and hints from the National Development and Reform Commission (NDRC). From the start, consumers' confusion has turned into a painful "unrequited love" in the context of volatile oil prices. People were excitedly arguing that a drop in oil prices was not only an economic possibility but also a psychological expectation. Yet, regardless of the pricing mechanism or the influence of oil companies, their voices have gone unheard—refiners claim they don’t control the pricing, while the NDRC says “watch carefully.” (Extended reading: Are Consumers Falling for “Unrequited Love” with Oil Prices? It’s Time to Align with Public Sentiment) “Leave it to the market,” or “take advantage of the situation”—China’s oil prices are at a critical crossroads. Four months ago, Chinese drivers were worried about whether domestic oil prices would reach 8 yuan per liter. Now, four months later, they’re collectively complaining why China’s oil prices aren’t following global trends. When oil prices fell sharply, people said, “If you rise, you should fall too.” **Development and Reform Commission: Caught in a Dilemma** The NDRC has revised its refined oil pricing mechanism three times in eight years. According to a source familiar with the matter, the commission is now in a difficult position. Recent declines in international oil prices have sparked public dissatisfaction, with many questioning the NDRC’s decision to raise prices while ignoring the downward trend. According to *Jiangnan Times*, if the government wants to ease public pressure, it might implement symbolic price cuts—but the consequences would be clear. Meanwhile, *China Youth Daily* reported that the NDRC originally aimed to align domestic oil prices with international standards. However, due to the separation between the NDRC and major oil companies, these companies are more sensitive to rising prices than to falling ones. As *Oriental Morning Post* noted, since last year, when China raised oil prices six times, the NDRC claimed the increases were to offset rising international prices. Sources revealed that holding this meeting is now urgent. If oil prices rise again, the justification based on international standards will lose credibility. **Consumers: When Will We Benefit?** Oil prices have now matched international standards. But who is listening? When the government raised prices before, it used the argument of aligning with global standards to justify its decisions. Now, domestic oil prices are even higher than international ones. According to the theory of international alignment, a reduction should be appropriate. So why is the government hesitant? Nearly 60% of respondents believe that China’s oil prices should be lowered. Among those who support price cuts, 49.51% believe that since domestic prices are rising, they should follow the global trend and be reduced. Another 36.72% argue that current domestic prices have already exceeded reasonable levels and should be adjusted downward. And 13.77% think that crude oil producers have no right to pass on high production costs to consumers. When will consumers see real benefits? High oil prices are affecting daily life, and the question remains: are consumer interests being ignored? This issue has become one of the most pressing concerns among the public. **What Should Oil Prices Be? Calls for Pricing Reform** Oil prices should reflect market conditions, not arbitrary decisions. The current system lacks a clear standard, and price cuts are often delayed. With international oil prices fluctuating rapidly, our response must be quick and flexible. Adapting to these changes may be challenging, but aligning with international standards reflects our evolving market. Only then can we create a truly market-driven environment where consumers feel the impact of price changes. Oil prices should act as a barometer of market shifts, not just a tool for political or economic convenience. A fair and transparent pricing mechanism is essential—not just for the industry, but for the people. **Profitable Oil Giants Face Pressure** With soaring international oil prices, China’s three major oil companies saw massive profits in the first half of the year. PetroChina earned nearly 80.7 billion yuan in net income, up 29.4% year-on-year; Sinopec made 20.7 billion yuan, up 14.6%; and CNOOC earned over 15 billion yuan. Together, they made over 116 billion yuan in profit, largely due to rising oil prices. Experts suggest that a symbolic price cut may occur, but it could be seen as a short-term fix rather than a real solution. The reform of the pricing mechanism remains a tough challenge, caught between market demands and political pressures.

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