After 2013, international crude oil prices remained at low levels, but China’s gasoline and diesel retail prices were supported by the floor price in the pricing mechanism. Therefore, the spread between wholesale prices and retail prices increased. But first, the price spread changed at wide ranges in the past five years. This shows the market balance was very fragile. It is easily influenced by changes in crude oil prices and the market demand. Second, independent refineries’ gasoline and diesel often enjoy higher retail profit than state-owned refineries’ products. Independent refineries often have lower production costs, so their products’ wholesale prices are lower.
In the first quarter of this year, because of domestic lockdowns for COVID-19 and low crude oil prices, the spread between wholesale prices and retail prices increased to high levels. The independent refineries’ gasoline retail profit reached over 3,000 RMB/mt in March.
