Could Government Oversight of Oil Lead to Lower Prices?

Newswise — Could the recent trend of tighter oversight by the government over many industries such as banks and automobiles be extended to the oil industry, and would it benefit consumers?

Though the scenario may not be likely in the United States, research by Dr. Oliver Roche of the Management and Marketing Department in Salisbury University's Franklin P. Perdue School of Business focuses on some of the benefits of government oversight of the oil industry in China. It also offers evidence that too much government involvement can stifle the long-term growth potential of oil companies in the development of their activities.

Roche's paper "The Corporatization of the Chinese Oil and Petrochemical Industries: Evolution Without Revolution" is slated for publication as a chapter in the book China Rules: Globalization and Political Transformation, edited by nationally recognized China business expert Ilan Alon of Rollins College in Winter Park, FL. The book is due this summer from Palgrave Macmillan Publishers.

Roche originally presented his findings in 2008 at a conference sponsored by the Ash Institute for Democratic Governance and Innovation at Harvard University. In the paper he argues that the partial listings of the state-owned enterprises in China's oil and gas sector represent a positive step to improve efficiency and promote management best practices.

Long-term performance improvement is likely to remain elusive, however, as long as the government exercises a strong influence on the capital investment decisions of these organizations, he said. He supported this opinion with data taken while studying three Chinese oil companies benchmarked against similar companies in other emerging markets during their pre- and post-initial public offering (IPO) performances.

For more information call 410-543-6030 or visit the SU Web site at www.salisbury.edu.