Cointegration between USA and major European gasoline price indexes: an empirical analysis

This study provides context for considering the impact of retail price movement of gasoline in between USA and six major European countries. It depicts to what extent gasoline price of the USA influences petroleum price of those countries and whether there is an opposite impact. The current market condition is changing continuously due to increased production capacity of the USA, increased refining capacity of Middle East, changing demand condition in European countries and international politics. It has a continuous impact on global gasoline price. The main purpose was to trace whether there is a relationship in gasoline price movement and its magnitude of influence. The primary observation identifies that, USA gasoline market and major European gasoline markets are highly cointegrated. In short-term it is highly integrated with the UK, Germany and France but in long run it is highly integrated with Belgium, Italy and Netherlands. It seems in the long run the UK and France magnifies the impact on other four countries.