BEIJING, Sept. 9 /PRNewswire-Asia/ -- Frbiz.com, one of China's leading B2B search platforms, today comments on the phenomenon surrounding China's natural gas price increases.
The National Development and Reform Commission announced on June 1 that the ex-factory natural gas benchmark price for 1000 cubic meters improved to 230 RMB, a price rise of 24.9%. After that, all areas across China adjusted gas prices.
Frbiz thinks that since the long-term domestic natural gas prices tend to be lower than crude oil prices, their remains an interconnected relationship. Frbiz pointed out that the price of natural gas and oil prices are generally connected, so when oil prices rise, the natural gas prices will rise too, but the range of increase is different. The range of oil price rises is big while those for natural gas prices are small.
Although in March or April, this year, international oil prices soared, the international natural gas price declined, which is mainly due to people's different expectations on oil and natural gas. It is only a short time phenomenon. In the long run, crude oil prices and gas prices will still remain intertwined.
China's domestic natural gas price is lower, which leads to an excessive growth in natural gas consumption, while it is disadvantageous to the international negotiations on the import of natural gas, and domestic natural gas production, which influenced last year's gas shortage situation. Therefore, the reform of natural gas prices is very necessary.
Objectively, the natural gas monopoly is more obvious than in the oil market, because it involves the pipeline, and before the pipeline there was a need for a large number of fixed asset investment, the project's development was long, and its prices are usually based on long-term contract prices, so the pipeline specificity determines the markets' characteristics.
Frbiz analyzes that China's natural gas prices are obviously low, so burning gas is more cost-effective than burning oil, thus causing local gas usage to expand very fast.
Now, domestic pipeline gas prices are higher for two reasons, one is the piped gas is long-term investment, and the other is the pipeline gas contract price is high.
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