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People's Daily Online>>China Business

China should not take the blame for soaring oil prices

By Wang Xiaorui (People's Daily Overseas Edition)

08:34, April 25, 2012

Edited and translated by People's Daily Online

Oil has been the leader in energy resources markets and changes in oil prices also have attracted wide attention. The international oil prices rose sharply in the past 10 years, with oil prices of London and New York rising by 552 percent and 439 percent, respectively. Since the beginning of the 21st century, the international oil market has been fluctuating, making the oil prices the hot topic again.

China has actually become the scapegoat for soaring oil prices in the grievance of international community. Some people said that China’s growing demand for oil was a cause for rising international oil prices.

What is the real reason for soaring of oil prices? People’s Daily Overseas Edition interviewed Bai Ming, researcher and deputy director of the International Market Research Department under China Academy of International Trade and Economic Cooperation.

U.S. the Largest oil consumer

Question: What is the real reason for rolling increase of oil prices?

Answer: Most people are not happy about the soaring of international oil prices, except that parts of oil-producing countries and international investment banks making money rely on speculation in oil. In fact, the growing scarcity of oil resources is the root cause for high international oil prices.

Currently, the United States is world’s largest oil-consuming country. The increasing demand for oil in the United States, to a large extent, has been transformed into stock of oil today. From the current international oil market, the United States contributes to stock of oil but China contributes to consumption of oil. Unfortunately, the current international oil prices precisely embodied the incremental demand for oil. This perhaps reflects the marginal pricing effect.

The soaring international oil prices are also resulted from some other reasons. For a long time after the war, the Western oil companies, known as the ”Seven Sisters,” monopolized the international oil prices but they basically maintained the stability of oil prices. Of course, it is not right to fully attribute the international oil prices to the international investment banks. Moreover, many investment banks and other financial institutions were dragged into the trouble of excessive fluctuation in oil prices.

To sum up, skyrocketing of international oil prices in recent years was resulted from multiple factors to a large extent.

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