Chapter 5 - Petroleum Product Demand

Abstract

This chapter explains a number of issues relating to the demand for various petroleum products. This helps in identifying possible ranges for future petroleum product demand, analyzing the key factors determining demand trends, and discussing some of the issues raised and the options that the demand trends create. Initially, the chapter reviews the current oil consumption out of the total energy consumption in China. Then it focuses on the principal petroleum products: gasoline, diesel oil, and fuel oil. It briefly discusses kerosene, jet fuel, naphtha, and LPG and gives a picture of total petroleum product demand. In the case of petroleum products, the annual plan controlled by the central government provides for most of the refined products used by state enterprises and fixes allocations for commercial departments, which make retail sales to residential and commercial consumers. The planned allocation system resulted in the establishment of quotas for regions and enterprises. As a percentage of total demand, oil consumption has increased markedly over the past three decades, but the rise has been very unsteady. China uses oil much less intensively than the rest of the world. In China, petroleum product demand is met primarily through domestic refinery production, but some crude is also burned directly. The reduction of direct burn has resulted largely from improving product transport infrastructure and expanding refining in certain locations. However, the decline in direct burn should slow down in the future, because the majority of China's power plants have converted from oil to coal use.