Market-oriented reforms, policy thresholds, and regional heterogeneity: in-depth examination of China’s refined oil pricing mechanism

China has continually reformed its refined oil pricing system to balance market efficiency with policy stability. This study revisits the pricing mechanism, emphasizing market reforms, policy thresholds, and regional heterogeneity. The regression analysis employs panel econometric and ARDL models, utilizing an unbalanced panel dataset spanning from June 2000 to October 2025. The dataset incorporates key variables, including two international crude oil prices, four refined product prices, exchange rates, and pipeline networks. Results show that shortening the adjustment cycle improved transmission timeliness. Ceiling and floor prices thresholds disrupt transmission under extreme conditions. Volatility control is stronger during price increases, with enhanced filtering under the WTI benchmark and further reinforced by policy thresholds. Regional heterogeneity is significant, with notable differences in both short- and long-term effects. Overall, market forces operate within defined policy limits, yielding varied outcomes across benchmarks and regions.