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Gaussian Process Regression for Forecasting Gasoline Prices in Jordan

Author

Listed:
  • Sameh Asim Ajlouni

    (Faculty of Economics and Administrative Sciences, Department of Economics, Yarmouk University, Irbid, Jordan,)

  • Moh'd Taleb Alodat

    (Faculty of Science, Department of Statistics, Sultan Qaboos University, Muscat, Sultanate of Oman.)

Abstract

The purpose of this paper is to forecast monthly gasoline prices in Jordan by applying Gaussian process regression on monthly prices of two types of gasoline (octane-90 and octane-95) during the period January 2008 to December 2019. Accurately predicting gasoline prices have several fiscal policy implications concerning fuel subsidies and taxes. Also, they affect the consumption and the production of decisions. Moreover, they are crucial for designing and analyzing environmental policies. The Gaussian process model was able to treat a geometric Brownian motion with a deterministic unknown drift function. The performance of prediction was measured using the Root Mean Square Error (RMSE) and the Mean Average Percentage Error (MAPE). Where the numerical results show that the model predictions of gasoline prices were accurate.

Suggested Citation

  • Sameh Asim Ajlouni & Moh'd Taleb Alodat, 2021. "Gaussian Process Regression for Forecasting Gasoline Prices in Jordan," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 502-509.
    • Handle: RePEc:eco:journ2:2021-03-61
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Geometric Brownian motion; Gaussian process regression; Gasoline prices; Maximum likelihood method; Covariance function;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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