Small petrol firms call to break monopolies in the sector
中小公司呼吁打破石油行業(yè)壟斷

The third plenum of China’s 18th CPC central committee will kick off in Beijing this Saturday. It's expected to inaugurate extensive economic reforms. Media reports indicate part of those reforms could well be breaking up monopolies in the country’s energy sector.

At two Petroleum stations in Shanghai, drivers said they routinely choose smaller stations rather than ones run by bigger players mainly for lower prices. Mr Lu has been a taxi driver for eight years.

"For taxis, the cheaper the better. Sometimes Sinopec offers discounts during the evening, but here there are discounts all day long." said Mr lu, taxi driver.

The price of number 92 fuel at this Dongliang station is 0.3 yuan per liter cheaper than that at the Sinopec station nearby. Sinopec’s price is 7.75 yuan per liter. Staff at the station says they usually try to undersell the market, and drivers confirm this.

"Compared with Sinopec and PetroChina, there are discounts here. " a driver said.

China, the world’s second-largest oil user, already relies on imports for 60 percent of its consumption and is set to double its fuel use by 2030. But right now, large state-owned oil companies still monopolize the sector. It’s not easy for smaller private operations to gain market share against the big established companies.

"In Shanghai, private stations may take up only 5 or ten percent of the market. It could be more in the suburbs. It’s just like a movie -- when the seats are full, there’s no room for late-comers." said Chen Xian, Executive Dean, School of Economics, Shanghai Jiaotong Univ..

China’s leading oil and gas producer PetroChina and Asia’s largest refiner Sinopec reported last week net profit growth of some 20 percent in the third quarter. They are benefiting from higher refining margins following Beijing’s loosening of price controls earlier this year. Domestic prices are now allowed to more closely follow international levels. But there are doubts over how far Beijing will go to shake up the state-owned firms, given the difficulty of making large-scale changes, but there is no doubt over what the effects could be.

"Competition will help consumers to get better service and prices. The oil price would be 10 percent cheaper if the oil sector were open to more players." said Chen Xian, Executive Dean, School of Economics, Shanghai Jiaotong Univ..

China’s retail oil price has risen nearly 40 percent since 2009.