During a forum held by the overseas edition of People’s Daily, experts have given their analysis about the situation.
Q: Since the beginning of the new century, crude oil price has been increasing and broken the highest record many times. But the cost of production didn’t increase much, what’s the reason for the price hike?
Shen Jiru, a research fellow from the World Economic and Political Institute in Chinese Academy of Social Sciences (CASS) says oil supply is certain, but oil demand is increasing. Some accidents such as Hurricane Katrina and regional conflicts like Iraq war, or sanctions and embargo of oil to certain countries, all these can cause oil price hikes.
Peng Long, professor from International Business School of Beijing Foreign Studies University says oil has become a strategic resource in international relations and anti-terrorism struggle.
Zha Daojiong holds that oil is not renewable resources, since it is scarce, there is a gap between demand and supply, naturally, the price will be high.
Q: What are the new characteristics of the world energy and how should we respond to it?
Jiang Ruiping, professor from the International economic department of Foreign Affairs University of China said the current world energy market is very vulnerable for the future of energy crisis. Thus, any accidents or incidents will cause fluctuation of the market. The accidents include political unrest in oil producing countries such as Nigeria, escalation of international political or military conflict such as Iraq war and Iranian nuke issue and natural disasters.
Zha Daojiong holds the new characteristics of energy issue is that the two large developing countries China and India become more and more dependent on oil while developed countries depend less as they have somewhat finished their industrialization.
Shen Jiru says energy issue is a global one. It concerns anti-terrorism, environment protection, science and technology and regional security. Thus, it needs all the countries to join hands to deal. More and closer cooperation among countries are needed.
Q: Some people predict oil price has reached its peak, what is the new trend of the oil price?
Shen Jiru says it’s too optimistic to say the price peak has come. But some experts say when the oil price increases to 75 U.S. dollars per barrel, it will reach its peak because with world economic slowdown, the demand for oil will also slow down.
Peng Long says in the predictable future, the slowdown might be true, but the price decrease is unlikely.
Jiang Ruiping predicts that the oil price will be at a high level between 50 and 80 U.S. dollars per barrel for a long time.
Q: What will be the emphasis of China’s energy strategy and diplomacy?
Zha Daojiong said it’s not strategic to think energy diplomacy is just to guarantee oneself to have sufficient supply. Although in recent years China was somewhat criticized for acquiring oil supply from the international market, China shouldn’t just passively deal with the criticism and pressure, but should take the process of getting international supply as a process to improve understanding among all the stakeholders.
Jiang Ruiping said the emphasis should be in establishing a strategic oil reserve system, participating in bilateral and multilateral cooperation in energy, expand investment in energy exploration and expand sources of oil supply and ensure the security of energy transportation.
Peng said China should strengthen its cooperation with oil exporters. And the cooperation shouldn’t be only in diplomacy, but also in political, economic and cultural fields.
