However, the shortage comes as quite a shock if we consider the statistics of refined oil exports in September and October released by Chinas General Administration of Customs. Over those two months, Chinas refined oil exports increased by 23.4 percent and 19.8 percent respectively from a year earlier, reaching a January-to-October total of 22.9 million tons. With the salient growth in the past two months refined oil export, the contrast of a domestic shortfall seems quite ironic. People may want to ask, Where did our oil go?
The CNPC explained to the public that there are multiple reasons for the current diesel deficiency. First, since Chinas oil product pricing system only responds to international crude oil price changes once every 22 days, the continuous global oil price climb which started at the end of September forced many local refineries to decrease their production; second, domestic diesel demands usually increase sharply during the fourth quarter, and the increase became especially evident along with the gradual recovery of the global economy; third, some refineries usually conduct their regular maintenance in August and September and therefore are not so much involved in production; fourth, the limit on power supply and the domestic speculative capital also diminished the diesel production.
The official response from CNPC brought about questions from many energy experts. An anonymous expert told Sina.com that the demand enlargement and resource shortage only contributed partially to the diesel deficiency this time. The monopoly in domestic oil industry is more likely the major cause.
A commentary by Fu Ziheng, a researcher at Jutian Securities Research Center, states that China currently does not have an effective pricing regulation system on wholesale oil. However, China does have a retail system, so the two oil supplier magnates who monopolize the chains of production and wholesale can bid the price up. Meanwhile, the oil retailers will fail to make a profit or even suffer a loss when they sell their stored oil to end consumers.
