 Greenflation or greensulation? The case of fuel excise taxes and oil price pass-throughEnergy Economics, 2025, vol. 148, issue C Abstract: This paper examines the role of fuel excise taxes in mitigating the impact of global oil price fluctuations on domestic inflation. Using a panel dataset of 28 OECD countries from 2014 to 2021, the study explores how varying levels of fuel excise taxes affect the pass-through of oil price changes to retail fuel prices and overall CPI inflation. A range of econometric models confirms the robust relationship between fuel tax rates and oil price pass-through, indicating that higher fuel excise taxes are associated with a lower pass-through of oil price fluctuations to retail fuel prices and CPI inflation. Quantitatively, differences in fuel tax rates can account for approximately 30% of the variation in annual CPI inflation between countries such as the U.S. and the U.K. during the 2021 inflation surge. These results suggest that fuel excise taxes can serve as a buffer against volatile oil price shocks, offering a potential role for stabilizing domestic inflation in the face of global energy price volatility. Keywords: Fuel excise tax; Gasoline tax; Diesel tax; Oil price pass-through; Retail fuel price; Inflation; Greenflation; Greensulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s0140988325004402 DOI: 10.1016/j.eneco.2025.108613 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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