Oil is a special commodity which has three attributes of consumption, industry and society, which is related to the development of national economy and ecological environment. The formation cause of the crisis of the atmosphere was discussed briefly, and we got the conclusion that the main influential factor is the lower quality of oil products. First the paper analyzed the current situation that the standards of gasoline and diesel in China are lower and the impact on the environment on the

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... is of foreign comparison. Then based on the knowledge of petroleum products and oil enterprise, we analyzed the influential factors of the quality upgrade of oil products. Finally by building oil enterprise profit model based on environmental taxation and the subsidies of product upgrade and studying the behavior of oil enterprise, we got the conclusion that the government can promote product upgrades by raising environmental taxation and subsidies and also regulate the prices of petroleum products indirectly to achieve optimal equilibrium by adjusting the tax rate and subsidies.