China’s dependence on imported oil is close to half

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“At gas stations, nearly half a liter of every liter of fuel we purchase is processed from imported crude oil. ”Recently, a responsible official from the **Development and Reform Commission, in response to journalists’ questions regarding the stabilization of oil prices and the guarantee of market supply, said that China’s oil consumption is increasing year by year, with its dependence on imported oil rising continuously; it is expected to reach nearly half this year. 　　The official analyzed that the supply and demand balance of international oil is in a fragile state, which is the fundamental reason for the continuous rise in international oil prices. 　　In recent years, as the global economy has continued to grow, demand for crude oil has risen steadily, reaching 85.9 million barrels per day in 2007 – an increase that is almost twice that of the previous year. From 2001 to 2005, crude oil production increased by 1.4% on an average annual basis, and supply and demand are expected to be roughly in balance this year. Meanwhile, it is predicted that heating oil usage in the Northern Hemisphere this winter will increase by 1.78 million barrels per day compared to the previous year, with the remaining production capacity of oil-producing countries expected to remain at the level of 2–3 million barrels per day. Therefore, oil prices are prone to sharp fluctuations due to other factors. 　　Although the prices of refined oil were adjusted on November 1, with an increase of 500 yuan per ton, the contradiction between domestic refined oil prices and crude oil prices remains significant due to the continued sharp rise in international oil prices. Due to the reduced processing volume by local refineries, the supply of refined oil products in the country has become tight, with some areas even experiencing interruptions or restrictions on supply. 　　The official revealed that, amid rising oil prices, the central government has increased subsidies to protect the interests of public-service sectors and those in difficult situations. The subsidies come from special revenues imposed on the oil industry. In 2006, a special oil revenue levy of 45 billion yuan was collected ； 41 billion yuan was collected in the first three quarters of this year. It is estimated that over 60 billion yuan will be collected throughout the year. In 2006, subsidies of 21 billion yuan were provided to public-interest industries and those in difficulty; this year, the amount of subsidies has reached 42 billion yuan. 　　The official stated that in an era of high oil prices, it is necessary to advance reforms regarding the prices of resource-based products such as oil in a proactive and cautious manner, to accelerate the development of a fuel tax and introduce it at an appropriate time, and to study and establish tax incentives to encourage the use of energy-efficient and environmentally friendly vehicles and ships, while imposing restrictions on those that are highly energy-consuming and polluting. At the same time, priority and mandatory procurement of energy-saving products is implemented; agencies replace old vehicles with yellow-label vehicles, and a system of fixed-location fueling with a card per vehicle is adopted.