The Relationship between Crude and Refined Product Market: The Case of Singapore Gasoline Market using MOPS Data

Gyaneshwar Rao

MPRA Paper from University Library of Munich, Germany

Abstract: Economic theory suggests that refined and crude oil prices should be interrelated as the refined products are a derivative of the crude product and hence the prices of the two categories must have a long run relationship. However any short term feedbacks between the two markets are also of interest. Any feedbacks which are significant between the markets will greatly improve our understanding of how the complex oil markets work and that the workings of both the markets are not as independent as some would want to believe. The Johansen and Julius VCEM technique and Granger causality tests using co-integrating methodology show there is a basis to conclude that there is a uni-directional causality running from crude market to the refined product market, confirming a long run relationship between the markets.

Keywords: Crude Prices; Refined Prices; Long Run Relationship; Granger causality; Mean of Platts (MOPS) (search for similar items in EconPapers)
JEL-codes: C22 Q40 Q49 (search for similar items in EconPapers)
Date: 2008-03-09
New Economics Papers: this item is included in nep-ene and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:7579

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