Our commenter googleheim (goooooooog!!!!) reported this the other day in a post on a similar policy implemented by China. So we can see some governments out there imposing domestic oil price controls in USDs on oil in the face of the collapsing oil external price in USD terms.
Have to think about the effect this emerging policy trend to control a major traded commodity domestic price in USD terms would tend to effect the exchange rates of the currencies of the countries vs. USD...
Top story: OilVoice | Andes Energia announces domestic oil price in Argentina a… https://t.co/CyZDg7kAnA, see more https://t.co/Ayw1zSInpi
— paramount (@tsmsinc) January 12, 2016
3 comments:
if they set price floors and they don't control trade the only thing accomplished is that national consumers will import the oil from cheaper places.
But at the same time it also raises demand from other sources (imports). Argentina may be negligable, but China certainly is not. And if more countries do it, then it is de-facto setting the price of oil higher.
State owned entities doing this ....
Looks like govt is setting a price floor for their own oil firms...
Could be banks financing the inventories could use the higher govt price in their asset valuations for regulatory reporting...
China said thier govt was going to "make money!" under this scheme... they pay $30 USD and then sell it to their refiners for yuan equivalent of 40 USD. ... so they still are out the 30 usd but their banks financing the oil dont have to mark down the value of the inventories in yuan terms...
Pretty convoluted
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