The Relationship between Crude and Refined Product Market: The Case of Singapore Gasoline Market using MOPS Data
AbstractEconomic 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.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7579.
Date of creation: 09 Mar 2008
Date of revision:
Crude Prices; Refined Prices; Long Run Relationship; Granger causality; Mean of Platts (MOPS);
Find related papers by JEL classification:
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-15 (All new papers)
- NEP-ENE-2008-03-15 (Energy Economics)
- NEP-SEA-2008-03-15 (South East Asia)
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