The price reduction war at gas stations began in early May, initially with Sinopec reducing retail prices in multiple cities in Northeast and North China. Later, it gradually spread to inland cities such as Henan and Shanxi, as well as southern cities such as Jiangsu, Zhejiang, Fujian, Guangzhou, and Huizhou, with ranges from 1.2 yuan/liter to 2 yuan/liter.

The reasons for the price reduction are multifaceted, such as the weak operation of international oil prices, the growth of domestic gasoline and diesel supply, the tight export door of local refineries, the joint efforts of the two main businesses to suppress private gas stations, and the expansion of sales to prepare for overseas listings. The specific reasons will not be repeated here. It is worth noting that in this price reduction war, we found that the scope of the price reduction was not nationwide, and there was no price reduction in areas such as the northwest and southwest. Similarly, gas stations in the eastern region, including Beijing, Tianjin, and Shanghai, did not significantly reduce prices.

Through investigation, we found that the 92 # gasoline at Sinopec gas stations within the second ring road in Beijing is still between 6.33-6.35 yuan/liter, while the 92 # gasoline at Sinopec gas stations in Tianjin is also between 6.33-6.34 yuan/liter, and the 92 # gasoline in Shanghai is around 6.31 yuan/liter. According to a person in charge of a main sales company in Beijing, "the retail prices of gas stations in Beijing have basically not decreased. Only in areas with both private and main businesses, and fierce competition, will the prices of Sinopec stations decrease." The main reason why the price reduction war of gas stations did not spread to these three areas is:

1. Large gasoline consumption in Beijing, Tianjin, and Shanghai without inventory pressure

The three cities of Beijing, Tianjin, and Shanghai have a large number of automobiles. According to Longzhong data, in 2016, the gasoline consumption in the three cities was about 9.95 million tons, while in 2016, the national gasoline consumption was 119.05 million tons, accounting for nearly 8% of the national consumption. In addition, currently in the peak summer gasoline consumption season, there is no problem of high inventory pressure in Beijing, Tianjin, and Shanghai, so there is no need to reduce prices and promote sales.

2. Sinopec in the central urban area has a large market share and needs to reduce prices to seize the market

Taking Beijing as an example, there are a total of 1053 gas stations in Beijing, including 506 under Sinopec and nearly 200 under PetroChina. The remaining 300 are foreign and private gas stations, with Sinopec accounting for half of the market share. According to a survey, the retail price of a certain Sinopec gas station near the South Third Ring Road in Fengtai District, Beijing is 5.55 yuan/liter, which is 0.8 yuan/liter cheaper than the guide price of 6.35 yuan/liter. However, the listed prices of gas stations near Financial Street, Jishuitan, and other areas within the Second Ring Road have not changed at all. Within the Second Ring Road, Sinopec's direct stores are all located. In addition, with high passenger flow and high rent, there is no need to reduce prices and promote sales. In places where there is fierce competition, such as PetroChina, Sinopec, and private stations, there will be a price reduction of 0.5 to 0.75 yuan/liter. The magnitude is also far inferior to other cities.

3. Although locally refined oil products have an impact, they are mainly sourced from external sources

Private gas stations are the main consumer terminals of local refining gasoline and diesel products. Nearly half of the gasoline and diesel resources in North China come from Shandong local refining, and Beijing, Tianjin, and Shanghai are no exception. However, in these three places, the main form of local refining oil is outsourcing, and the oil ultimately flows to terminal gas stations led by Sinopec, so there is no need for price reduction and promotion.

The price reduction of gas stations is the result of PetroChina, Sinopec, and private gas stations seizing market share. The main reason why Beijing, Tianjin, and Shanghai were not involved in the price reduction war is that the markets in these three places have been firmly grasped, so there is no need for price reduction.