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Dynamic fuel price pass-through: Evidence from a new global retail fuel price database

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  • Kpodar, Kangni
  • Abdallah, Chadi

Abstract

We estimate the dynamic effects of crude oil price shocks on retail fuel prices, the pass-through, using the local projection approach of Jordà (2005). Using a novel monthly dataset of retail fuel prices in 162 countries over the period from 2000:1 to 2014:12, we find that: (i) retail gasoline prices respond positively to crude oil price shocks, but the responses vary across regions and income groups; (ii) there is also some variation across country groups in the persistence of the effects of crude oil price shocks on retail gasoline prices; and (iii) declines in crude oil prices lead to smaller effects on retail gasoline prices than increases in crude oil prices, pointing to an asymmetry in the fuel price pass-through.

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  • Kpodar, Kangni & Abdallah, Chadi, 2017. "Dynamic fuel price pass-through: Evidence from a new global retail fuel price database," Energy Economics, Elsevier, vol. 66(C), pages 303-312.
    • Handle: RePEc:eee:eneeco:v:66:y:2017:i:c:p:303-312
    DOI: 10.1016/j.eneco.2017.06.017
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    Cited by:

    1. Kpodar, Kangni & Imam, Patrick Amir, 2021. "To pass (or not to pass) through international fuel price changes to domestic fuel prices in developing countries: What are the drivers?," Energy Policy, Elsevier, vol. 149(C).
    2. Kpodar, Kangni & Liu, Boya, 2022. "The distributional implications of the impact of fuel price increases on inflation," Energy Economics, Elsevier, vol. 108(C).
    3. von Uexkull, Nina & Rød, Espen Geelmuyden & Svensson, Isak, 2024. "Fueling protest? Climate change mitigation, fuel prices and protest onset," World Development, Elsevier, vol. 177(C).
    4. Mr. Kangni R Kpodar & Ms. Stefania Fabrizio & Kodjovi M. Eklou, 2019. "Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?," IMF Working Papers 2019/025, International Monetary Fund.
    5. Cecile Couharde & Sara Mouhoud, 2020. "Fossil Fuel Subsidies, Income Inequality, And Poverty: Evidence From Developing Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 981-1006, December.
    6. D. O. Olayungbo & T. A. Ojeyinka, 2022. "Crude oil prices pass-through to retail petroleum product prices in Nigeria: evidence from hidden cointegration approach," Economic Change and Restructuring, Springer, vol. 55(2), pages 951-972, May.
    7. Agradi, Mawunyo, 2023. "Does remittance inflow influence energy poverty?," Applied Energy, Elsevier, vol. 335(C).
    8. Ozgur, Onder & Aydin, Levent & Karagol, Erdal Tanas & Ozbugday, Fatih Cemil, 2021. "The fuel price pass-through in Turkey: The case study of motor fuel price subsidy system," Energy, Elsevier, vol. 226(C).
    9. Kangni Kpodar & Maëlan Le Goff & Singh Raju Jan, 2018. "Financial Deepening, Terms of Trade Shocks, and Growth Volatility in Low-Income Countries," Post-Print hal-01907579, HAL.
    10. Hamid Baghestani & Jorg Bley, 2020. "Do directional predictions of US gasoline prices reveal asymmetries?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(2), pages 348-360, April.
    11. Abdallah, Chadi & Kpodar, Kangni, 2023. "How large and persistent is the response of inflation to changes in retail energy prices?," Journal of International Money and Finance, Elsevier, vol. 132(C).
    12. Mohamed Boly & Pascale Combes Motel & Jean-Louis Combes, 2019. "How much does environment pay for politicians?," Post-Print hal-02314982, HAL.
    13. Chang, Kai & Zhang, Chao, 2018. "Asymmetric dependence structure between emissions allowances and wholesale diesel/gasoline prices in emerging China's emissions trading scheme pilots," Energy, Elsevier, vol. 164(C), pages 124-136.
    14. Boudekhdekh, Karim, 2022. "A comparative analysis of energy subsidy in the MENA region," MPRA Paper 115275, University Library of Munich, Germany.
    15. Wood, Dallas & Larson, Justin & Jones, Jason & Galperin, Diana & Shelby, Michael & Gonzalez, Manuel, 2022. "World oil price impacts on country-specific fuel markets: Evidence of a muted global rebound effect," Energy Economics, Elsevier, vol. 111(C).
    16. Boly, Mohamed & Combes, Jean-Louis & Combes Motel, Pascale, 2023. "Does environment pay for politicians?," Economic Modelling, Elsevier, vol. 128(C).
    17. Pradeep, Siddhartha, 2022. "Impact of diesel price reforms on asymmetricity of oil price pass-through to inflation: Indian perspective," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).
    18. Kangni Kpodar & Maëlan Le Goff & Raju Jan Singh, 2019. "Financial Deepening, Terms of Trade Shocks and Growth in Low-Income Countries," Working papers 719, Banque de France.
    19. Mehmet Balcilar & David Roubaud & Ojonugwa Usman & Mark E. Wohar, 2019. "Testing the Asymmetric Effects of Exchange Rate and Oil Price Pass-Through in BRICS Countries: Does the state of the economy matter?," Working Papers 15-49, Eastern Mediterranean University, Department of Economics.

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    More about this item

    Keywords

    Retail fuel prices; Pass-through; Asymmetry;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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