In response to the current domestic oil supply challenges, the National Development and Reform Commission, along with the Ministry of Finance, the Ministry of Commerce, the General Administration of Customs, and the State Administration of Taxation, have issued a joint notice to revise the existing export policies for refined oil products. As part of this adjustment, the government has decided to suspend the tax rebate on domestic gasoline exports from September 1st to December 31st this year. This policy change has sparked widespread debate among industry professionals and analysts.
Some experts argue that simply removing the export tax rebate may not be sufficient to address the so-called "oil shortage" issue. They emphasize that the problem stems from deeper structural issues in the pricing mechanism, wholesale distribution, and financial support systems within the petroleum sector. Without addressing these root causes, short-term measures like tax rebates may only offer temporary relief.
According to an expert from the Henan Academy of Social Sciences, the current oil shortage is primarily due to an imbalance in the domestic refined oil market. At the same time, many local refining companies are continuing to minimize losses and maximize profits by exporting crude oil. The price discrepancy between imported crude oil and exported refined products, as well as the gap between the cost of crude oil and the ex-factory prices of refined goods, has pushed companies toward exporting as a way to sustain their operations. This situation is largely attributed to the existing monopoly in China's oil supply and production system. Without fundamental reforms, the oil shortage could persist for a longer period.
Data from industry sources shows that the price of gasoline in Singapore, Rotterdam, and New York is currently about 1,400 yuan per ton lower than in China. This creates a significant profit margin for exporters, with gross margins exceeding 28%. Even after accounting for additional costs, the net profit remains around 25%. Given that the current export tax rebate rate in China is only 11%, it’s clear that even without this rebate, exporters can still make substantial profits—approximately 14%—which suggests that the suspension of tax rebates may not have a major impact on curbing exports.
Moreover, while halting the tax rebate might limit some companies’ ability to export, it may not necessarily lead to an increase in domestic oil supply. A CEO from an oil refinery in East China remarked, “There are always policies and countermeasures.†Companies are aware that domestic oil prices are expected to rise, so they may strategically limit the amount of refined oil they release into the market. Similarly, some speculators in Henan Province have started stockpiling refined oil products, waiting for prices to climb before selling them.
Given these dynamics, some experts suggest that while suspending the export tax rebate can serve as a supplementary measure, it should not be the sole solution. To truly address the oil shortage, the government must take more comprehensive steps, such as breaking the current monopoly in the oil supply and production sectors, encouraging private investment in the refined oil market, and enhancing the strategic reserve system for refined products. Additionally, support should be provided to industries heavily impacted by oil price fluctuations, such as transportation and manufacturing.
In summary, relying solely on the suspension of export tax rebates is not a sustainable or effective long-term solution. A more holistic approach is needed to stabilize the market and ensure a steady supply of refined oil products for consumers.
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