EconPapers    
Economics at your fingertips  
 

Oil and pump prices: Testing their asymmetric relationship in a robust way

Zacharias Bragoudakis, Stavros Degiannakis () and George Filis ()

Energy Economics, 2020, vol. 88, issue C

Abstract: The aim of this study is to provide a novel method to assess whether retail fuel prices respond asymmetrically to changes in the international crude oil prices. To do so, we consider the whole supply chain, we use daily data and we depart from the current practice in the literature that focuses on prices. Rather, we consider the mark-ups of both the refineries and retailers. Hence, we show that we first need to assess whether the refineries' mark-up responds asymmetrically to the international crude oil prices and subsequently whether the retailers' mark-up shows an asymmetric behaviour relatively to changes in the refined fuel prices. Focusing in Greece as our case study, our findings show that Greek fuel retailers do not change their mark-up behaviour based on changes of the refined fuel price. By contrast, the asymmetric behaviour is evident in the refineries' mark-up relatively to changes in the international crude oil prices, which is then passed through to the retailers and consumers. Finally, we provide evidence that weekly and monthly data mask any such asymmetric relationship. Thus, we maintain that unless the appropriate data frequency, fuel price transformations and the whole supply chain are considered, misleading findings could be revealed.

Keywords: Oil price shocks; Fuel prices; Asymmetric responses; Rockets and feathers; Pass-through (search for similar items in EconPapers)
JEL-codes: C22 C32 D40 Q41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988320300943
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:88:y:2020:i:c:s0140988320300943

DOI: 10.1016/j.eneco.2020.104755

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
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-04-08
Handle: RePEc:eee:eneeco:v:88:y:2020:i:c:s0140988320300943