The reform on opening the markets of crude oil and of petroleum products is a supporting point or lever of the whole petroleum industry reform, which involves fewer aspects, and is with less rigid comparing with the reform that touches the vested interest of the upstream industries of the oil monopoly enterprises, such as oil extraction and petroleum refining, while would get twice the result with half the effort. On the one hand, the reform can obtain most of benefits quickly from the breakup of monopoly, namely it can eliminate the losses of consumers caused by monopolistic high prices, and will eliminate the net loss of social welfare caused by the limitation on enterprise entrance. According to welfare loss caused by the monopoly in 2011, the reform would obtain 79% or four-fifths of static effects of the petroleum industry reform (as shown in the figure below), in addition, it also would increase a total sales volume of above RMB 300 billion per year due to local oil refining enterprises to increase the utilization of their capacity.
Research Report Conclusion and Abstract and Complete Chinese Report
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