I'm confused, so if China reducing their oil consumption is bad for the environment, does that mean China burning more oil is good? Call me skeptical.

Demand needs to drop, that's always a good thing. Yes, in the short term prices may also drop and some dickheads will get a good deal, but prices will correct as the industry shrinks and production drops. The more demand drops, the less economical large refineries become, and we can finally enjoy the death spiral of a contracting industry.

There are other (better) ways to kill the industry like a carbon tax and banning production, but in the spirit of trying all of the approaches this is still positive.