The Great Challenges of International Price Fluctuations The Real Challenge of Energy Price Reform

Relevant media reports have highlighted that "the National Development and Reform Commission experts stated that the Chinese government will immediately begin collecting a fuel surcharge tax," reigniting public interest in fuel taxation and China’s broader energy price reform. In fact, the reform of energy pricing—including the introduction of a fuel tax—is an essential step in China's economic development. Once this threshold is crossed, the real challenge lies in managing the volatile fluctuations of international energy markets. Energy prices, particularly oil, have shown extreme volatility over time. For example, oil prices surged from $60 per barrel in January 2007 to a peak of $147, only to drop back to $60 within four months. This rapid fluctuation has been likened to a rollercoaster. The causes behind the initial rise were complex—economic growth, liquidity excess, U.S. dollar depreciation, geopolitical tensions, OPEC production cuts, and speculative trading. Later, the global financial crisis triggered by the U.S. housing bubble led to a sharp decline in oil prices, which had a major impact on the global economy. Historically, government-controlled pricing has provided more stability in energy prices. However, China's long-term low energy prices, maintained through administrative control, come with significant costs. These controlled prices are essentially a form of hidden inflation, leading to continued supply shortages and accumulated price pressures. When these pressures eventually surface, they can cause sudden and drastic price increases. Additionally, the recurring issues with coal, electricity, and refined oil supplies show that distortions in energy pricing have become increasingly problematic, negatively affecting the economy. To maintain low energy prices, the government has had to provide substantial fiscal subsidies, often at the expense of state-owned enterprises. While this appears to keep prices stable, it actually results in a heavy cost, including resource misallocation and increased demand, which further exacerbates supply-demand imbalances and contributes to future price volatility. Currently, there is growing momentum for reforming the domestic refined oil pricing mechanism and introducing a fuel tax. Government-controlled pricing has turned into a complex game involving the government, oil companies, and the public. State-owned oil companies' monopoly has made this issue even more complicated. Many believe that the two major oil groups hold the power to delay or avoid price adjustments. With China's increasing reliance on foreign energy resources, maintaining such pricing mechanisms has become unsustainable, creating challenges such as excessive subsidies, unfair distribution, rising energy demand, and declining efficiency. To address these issues, China must proceed based on its national conditions, implement energy price reforms that reflect scarcity and environmental costs, improve energy efficiency, guide investment properly, and promote a market-oriented energy pricing system. The author believes now may be a good time for refining oil price reforms. After experiencing high oil prices, Chinese consumers have become more resilient, making them more accepting of reforms. With international oil prices falling sharply, the reform also benefits consumers. Affected by the global financial crisis, China’s inflation has dropped, allowing the government to handle the reform more calmly. For oil companies, regardless of whether prices change, the trend is toward lower prices. Institutional reform is a long-term positive, as it shifts focus from price battles to improving operational efficiency. However, the government’s main concern should be the potential for large price swings after reforms and their impact on economic and social stability. Energy price stability is influenced by many factors, including supply uncertainty, geopolitical risks, speculation, and currency depreciation. Fossil fuel reserves, future price trends, and technological changes all add to the unpredictability of energy markets. Given these uncertainties, ensuring stable energy prices requires strengthening reserves, improving extraction efficiency, and curbing speculation through effective market mechanisms. After price liberalization, domestic energy prices will align with international markets and face global fluctuations. In the short term, this could lead to some instability. But in the long run, a market-driven pricing system will create clearer signals, enhance flexibility, boost economic vitality, and improve energy efficiency. Thus, reforms will lay the foundation for more stable and sustainable energy prices. To ensure stability post-reform, the government must first strengthen energy reserves and improve extraction and usage efficiency. Second, it must regulate energy speculation effectively through market mechanisms. Third, subsidies should be designed to be short-term, fair, and transparent. In the long run, as subsidies decrease and prices reflect true costs, energy prices may continue to rise, but the goal is to prevent them from rising too fast or too high. Managing the impact of price fluctuations on the macroeconomy remains a critical challenge for China.

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4. The cylinder liner of a two-stroke diesel engine is arranged with an air port, which is opened and closed by a piston to realize gas distribution.

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The inner surface of the cylinder is easy to wear due to the action of high temperature and high pressure gas and the contact with the high-speed moving piston. In order to improve the wear resistance of cylinder and prolong the service life of cylinder, there are different cylinder structure forms and surface treatment methods. There are three types of cylinder structure: no cylinder liner type, dry cylinder liner type, wet gas cylinder liner type.

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