Political determinants of fossil fuel pricing

Cees van Beers and Jon Strand

No 6470, Policy Research Working Paper Series from The World Bank

Abstract: This paper provides an empirical analysis of economic and political determinants of gasoline and diesel prices for about 200 countries over the period 1991-2010. A range of both political and economic variables are found to systematically influence fuel prices, and in ways that differ systematically with countries’ per-capita income levels. For democracies, the analysis finds that fuel prices correlate positively with both duration of democracy and tenure of democratic leaders. In non-democratic societies there is more often no such relationship or it is the opposite of that for democracies. Regime switches -- transitions from non-democratic to democratic government, or vice versa -- reduce fuel prices. Fuel prices are also lower for more corrupt, or more centralized, governments. Higher levels of gross domestic product per capita lead to higher fuel prices, while export income from selling fossil fuels reduces these prices dramatically. Higher motor fuel consumption also appears to reduce fuel prices, most for gasoline. Absolute"pass-through"of crude oil price changes to fuel prices is found to be high on average.

Keywords: Energy Production and Transportation; Transport Economics Policy&Planning; Economic Theory&Research; Emerging Markets; Transport and Environment (search for similar items in EconPapers)
Date: 2013-05-01
New Economics Papers: this item is included in nep-ene, nep-pol and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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