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Oil and pump prices: Is there any asymmetry in the Greek oil downstream sector?

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  • Bragoudakis, Zacharias
  • Degiannakis, Stavros
  • Filis, George

Abstract

The aim of this study is to assess whether fuel prices in Greece respond asymmetrically to changes in the global oil prices. To do so, we depart from the current practice in the literature that focuses on fuel prices. Rather, we consider the mark-up of both the refineries and retailers. Even more, unlike the bulk of the existing literature, we take into consideration the whole supply chain, i.e. both the refineries and the retail fuel sector. Hence, we first assess whether the refineries’ mark-up responds asymmetrically to the global oil prices and subsequently whether the retailers’ mark-up shows an asymmetric behaviour relatively to changes in the refineries’ fuel prices. Our findings show that the 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 global oil prices, which is then passed through to the retailers and consumers. Finally, we convincingly show 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.

Suggested Citation

  • Bragoudakis, Zacharias & Degiannakis, Stavros & Filis, George, 2019. "Oil and pump prices: Is there any asymmetry in the Greek oil downstream sector?," MPRA Paper 95407, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:95407
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    1. Malkidis, Stavros & Fountas, Stilianos, 2020. "Liquid fuel price adjustment in Greece: A two-stage, threshold cointegration approach," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).

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    More about this item

    Keywords

    Oil price shocks; fuel prices; asymmetric responses; rockets and feathers; pass-through.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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