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Energy Markets at War: The Effect of the Russian Invasion of Ukraine on Refinery Margins

Author

Listed:
  • Leonard Gregor
  • Justus Haucap

Abstract

This paper evaluates the effect of the Russian invasion of Ukraine in February 2022 on refinery margins, i.e. the difference between wholesale prices for road fuels (gasoline and diesel) and oil prices in Europe and Germany in particular. Following the Russian invasion of Ukraine, wholesale road fuel prices net of taxes rose by more than 50 cents per liter, whereas crude oil prices increased by only about 30 cents per liter. Using a difference-in-differences framework, we compare refinery margins in Germany with those on the Amsterdam–Rotterdam–Antwerp (ARA) spot market, which serves as a European benchmark price. The results indicate that refinery margins in Germany increased by approximately 5–6 cents per liter relative to the ARA region after the invasion. We attribute this differential primarily to Germany’s strong dependence on Russian Ural crude oil imports and to the presence of regional market power among German refineries. We further document substantial heterogeneity in treatment effects across both time and regions. In addition, the invasion was associated with a significant decline in fuel demand, with gasoline consumption falling by about 13% and diesel consumption by approximately 9%.

Suggested Citation

  • Leonard Gregor & Justus Haucap, 2026. "Energy Markets at War: The Effect of the Russian Invasion of Ukraine on Refinery Margins," CESifo Working Paper Series 12553, CESifo.
    • Handle: RePEc:ces:ceswps:_12553
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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