HeF

China: Lots of Oil Price Speculation

This is the problem -- as both of you indicate. There is certainly a cost in the short-term to relaxing oil prices, but the longer the price controls are in place, the more costly it is to maintain them (shortages, taxes, and misallocation) and the more costly to relax them. It has been pretty clear since at least last summer that oil price controls were becoming a real problem, but every few months something new shows up that creates a good reason not to relax them just yet. Those of us who think inflation is a monetary problem keep insisting that inflation will go up anyway, but unfortunately high inflation is the main excuse the government uses for not relaxing the price controls. This can easily get worse.