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; Brent ) changes more than 4% over 22 working days has been adopted by the National Development & Reform Commission (NDRC) in 2009.

The effectiveness and the transparency of the oil pricing mechanism was however doubted, believing that domestic oil prices were declining. This criticism was rebutted by the NDRC saying that the growth rate of refined oil prices in the domestic market is smaller than that of global crude oil prices. But the public is looking for a new better mechanism that can reflect the open market price.

An engineer in collaboration with China National Petroleum Corporation (CNPC) stated that China has drafted a new oil pricing mechanism that will be more sensitive to international price volatility.

Although such methodologies have been amended from time to time, China has in principle maintained the methodologies to determine the regulated price of oil based on product price and crude oil on the world market.

However, as the government has the sole discretion to make adjustment to the price (amount and timing), the mechanism still bears the nature of the government controls. Depending on the level of crude oil price, the refining margin fluctuates according to the 3 stages under this mechanism. For example when the crude oil price falls below $80 per barrel, oil refining sectors would enjoy the refining margin but when price exceeds $80 per barrel, there will be a narrower margin.

The price was exchanged 8 times in 2009 with no change in November 2009 to april 2010, inspite of crude oil price fluctuation. A request has been repeatedly submitted to the government to amend the basic formula for price adjustment by state owned oil companies.

Refiners and consumers do not welcome the current mechanism.

“The current 22-days system could possibly be improved to 14 days this year, and it could then be shortened to within 10 days” said by Lin Boqiang, director of China Center for Energy Economics Research at Xiamen University of East China’s Fujian Province.

Oil demand growth rates in China will continue to rise in the coming months said by many International Investors.

The full year average demand growth is expected to climb to 9% as compared to last year, predicted to Deutsche Bank.

(Maekawa, 2010; Kawamura, 2010; Woke 2010)

Taiwan

Taiwan has shifted its oil pricing mechanism in a step by step manner, from a government regulated pricing regime to a de facto government-regulated pricing regime, and finally to conditional deregulation. Incremental steps forwards deregulation of oil market has been taken now by Taiwan.

A price cap system to migrate the hike of gasoline and diesel price was introduced by Taiwan in 1993. However, under the petroleum business Act, due to the deregulation of oil product market, such as price cap system was lifted with the invocation of the provision of the act which justifies “ government market intervention in emergency cases”, the Taiwanese government frequently intervene in the price even in normal times, after the soar in crude oil price in 2005. Market has substantially been under the government control during this period of time. The basic policy of the Taiwanese government was shifted by laying down a new program entitled “action plan for stabilizing current prices”, in may 2008, in