World Oil Price Hike Tugs Nerves of Chinese Economy

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Last updated at: (Beijing Time) Friday, September 06, 2002

World Oil Price Hike Tugs Nerves of Chinese Economy

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Oil companies usually show no interest in political matters, but the Wall Street Journal on September 4 reported instead John Cook officiating in the Oil and Gas Office of the US Energy Ministry had complained of 'putting Iraq out of demand supply as a drag' on the US.

The impacts of price hikes by crude and finished oil in international markets are apparent on the part of Chinese citizens. Taxis have come to charge more along with a 15 percent of fuel taxes levied on air tickets and from these no building materials and metallurgical and chemical products have been excepted.

Since April this year, people saw mounting Palestine-Israel conflicts, hence a worsening Mideast situation and a price raise to 25.44 US dlrs per barrel of oil.

As the US intensifies its threat of US strike against Iraq since August, oil price centimes to climb in New York.

According to an estimation by Organization for Economic Cooperation and Development, following a 10 dlr price raise of oil per barrel 1 percent inflation would take on the developed countries one year after and greater impacts will be found on the Asian and developed countries.

World Bank president ever pointed out that the annual growth rate of world economy will thus decrease by 0.5%, while the developed countries' economic growth rate will drop by 0.75%.

Experts said that when a country's oil export exceeds 50 million tons, price changes in international markets will affect the country's national economy, if the figure surpasses 100 million tons, diplomatic ties, economic, military measures should be considered to guarantee oil supply safety.

�� China is short of crude oil supply at present, it also needs imports of chemical products with oil as material. So if crude oil price in international markets exceeds 30 US dlrs per barrel, the influence on China will be all the more clear, said a researcher with the Chinese Academy of Social Sciences.

Data from the Ministry of Land and Resources indicate that in recent ten years China's crude oil consumption volume have increased by 5.77% annually, while domestic supply remains only at 1.67% in the way supply fails to meet demand.

In 1993, China became an oil importer. The year 2001 saw China imported 65 million tons of crude oil or a 28% of its demand total and with these was an annual 12 million tons of finished oil imports notched.

Chen Mo, associate researcher with the Chinese Academy of Social Sciences said that high price rises of oil could be excluded over a long period of time to come. The world oil price tends to a possible US strike against Iraq and conflicts between Palestine and Israel, when their conflicts escalate, oil price may jump for some time.

So there will be no oil changes aside from such an ultimate factor as market demand for oil supply.

Chen Mo pointed out that world oil supply would basically strike balance with demand unless large-scale conflicts should occur. OPEC's reduction has very limited control over world oil market.

Chen said that there is still some space for a cut market price of oil. Oil crises worldwide have taught many countries lessons having come to lessen their dependence on oil imports. The developed countries have taken on the work for a restructuring of their economy, setting up oil reserves and exploiting inland and sea oil resources, use of natural gas and a range of renewable energy resources as hydraulic, wind force and solar energy. So from a long-term point of view, speedy high price rises of oil price as a whole can be excluded.

By PD Online Staff Li Yan

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