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Will international oil prices rise? Will domestic oil prices rise?

Will international oil prices rise? Will domestic oil prices rise?

(Summary description)After the economy continued to develop rapidly for forty years, cars have become a common mode of transportation.

Will international oil prices rise? Will domestic oil prices rise?

(Summary description)After the economy continued to develop rapidly for forty years, cars have become a common mode of transportation.

Information

  After the economy continued to develop rapidly for forty years, cars have become a common mode of transportation. Along with that, the oil that was once out of reach for us, and the price of oil, have become closely related to people's lives. Given the importance of oil to us, it is inevitable that we care about oil prices.

 

However, although many car owners are very concerned about oil prices, how many people really know what factors affect the price of oil? What parts of the oil price do we usually care about?

 

  Speaking of the reasons that affect the fluctuation of oil prices, most people think of international oil prices, thinking that when international oil prices rise, domestic oil prices rise; international oil prices fall, and domestic oil prices fall. In fact, this view is also correct, because under normal circumstances, domestic oil prices rise or fall in line with fluctuations in international oil prices;

 

However, there are times when domestic oil prices are not the same as those of international oil prices. For example, if international oil prices have risen, domestic oil prices may have remained stable; international oil prices have risen significantly, and our domestic oil prices have not increased significantly in parallel with other special circumstances. So what is the reason for this?

 

  To understand the reasons for domestic oil price changes, we must first understand a few concepts. The first is that international oil prices and the oil prices we care about are two concepts. International oil prices usually refer to the price of crude oil, and the oil price we are concerned about is the price of refined oil. As for the specific meanings of the terms crude oil and refined oil, we won't say much about them, but we can see their meaning in the names.

 

  The second concept is what factors make up the price of refined oil? Or is it determined by what factors?

 

  The prices of refined oil products that we usually come into contact with are mainly the price of crude oil, the cost of processing crude oil, and various related taxes. From this we can see that crude oil as the raw material of refined oil is an important factor in the refined oil price system. So under normal circumstances, when the price of crude oil rises, the price of refined oil will also rise. This is because the cost of refined oil has increased.

 

  But sometimes there are exceptions, such as changes in crude oil processing technology in addition to changes in crude oil prices. If the processing technology of crude oil is improved and the efficiency of processing crude oil is increased, the production cost of refined oil will be reduced, and the price of refined oil will be reduced.

 

  In addition to crude oil and processing technology, the amount of petroleum-related taxes will also affect the price of refined oil products, especially the larger value-added tax. At the beginning of 2019, China reduced the value-added tax in an oil price adjustment. Through this tax adjustment, the domestic refined oil price did not rise with the rise in international crude oil prices, which is equivalent to reducing the oil price in disguise.

 

  Therefore, we can draw a general conclusion: The domestic refined oil price is mainly affected by the international crude oil price, but at the same time, it will be adjusted through relevant policy changes according to China's actual situation. This keeps the price of oil in a range that everyone can accept.

 

  Although the means for adjusting oil prices may be various and the trend of adjustment may be different, the general rule can be seen, that is to keep the oil prices within a small range as much as possible.

 

  That is to maintain the overall stability of oil prices, and not to allow large changes in oil prices. It is not a sudden change, but a gradual change, whether it is rising or falling. This is why we often see domestic oil prices rising for four consecutive times, five consecutive times or several consecutive times. Only when oil prices are relatively stable can our economic development remain healthy and stable! (From China Energy Network)

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