Source: China Radio International

With oil prices tumbling, some experts believe that this is the perfect moment for China to reform its oil pricing mechanism because higher tax would currently inflict relatively little hardship on consumers. In an interview on China Radio International, Zhou Dadi shared his opinion that the government should seize this rare opportunity to create a pricing system that more accurately reflects the full economic and environmental costs of fuel production and consumption. Dadi, Director-General of the Energy Research Institute with China’s National Development and Reform Commission believes that pricing policy is an important measure to encourage energy conservation and environmentally responsible consumer behavior.

Dadi aimed to keep his expectations realistic, however, mentioning that the Chinese government may raise the fuel tax in several small steps rather than in one large jump. He expressed his hope that China will ultimately follow the example set by Europe and Japan, where fuel prices are market-based but include a high tax designed to shape consumer behavior.

From a broader perspective, Dadi also spoke about China’s overall oil resources. He said that domestic oil production is increasing more than 2.2% per year, and China is also looking to secure oil imports from a wide range of other countries. The key, he said, is to diversify sources of energy, and to consider energy security, geopolitics, and economic issues when making policy decisions.

Click here to listen to the full interview.