 A call for fuel tax
(China Daily)
Updated: 2008-11-01 07:50 If rocketing international oil prices and soaring domestic inflation this year make it an irresistible excuse to delay China's oil pricing reform, the current decline in the global oil market provides a rare opportunity to accelerate it. To raise the country's overall energy efficiency in pursuit of sustainable development, Chinese policymakers must not let slip through their figures this window of opportunity to speed up market-oriented reform of the oil pricing system. International oil prices have more than halved from a record high of $147 in July. Pressured by concerns that a looming global recession may derail oil demand growth this year and next, oil prices dropped by about 30 percent in October alone, almost the biggest ever monthly fall. The plunge in international oil prices has understandably prompted domestic calls for a cut in pump prices. To prevent consumer inflation from going through the roof, the Chinese government has left retail fuel prices unchanged since it hiked prices a month before international oil prices peaked.
Now, with both domestic inflation and international oil prices falling considerably, it is only natural for vehicle owners to demand lower domestic oil prices. And seemingly, policymakers are responding too. It was reported that related departments had already prepared proposals to cut retail fuel prices. Admittedly, an immediate cut in fuel prices will be popular among vehicle owners, which, in theory, can even help boost domestic consumption. But such a stopgap measure has nothing to do with the country's urgent need to raise energy efficiency. Worse, by making oil cheaper, it gives a false sense of security that the country can afford to consume oil or other energy products in the way it used to. At first glance, falling international oil prices may sound good news for China, a major oil importer with a growing appetite. However, it makes no sense to take a short-term adjustment in international oil prices as a fundamental change in supply-demand. In the long run, even if production of oil can be further boosted through new investment and technology, it will be impossible to prevent global demand from outstripping supply if worldwide efforts are not geared to raising energy efficiency rapidly enough. In this sense, dear oil prices can play into the hands of Chinese policymakers who are eager to goad domestic producers and consumers to use energy in a more efficient way. Hence, the current fall in international oil prices should not make a case for cheaper fuel. Instead, it is high time for the country to introduce a fuel tax that will reward energy conservation and punish those dragging their feet in raising their energy efficiency. (China Daily 11/01/2008 page4) |
