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Political determinants of fossil fuel pricing

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  • van Beers, Cees
  • Strand, Jon

Abstract

This paper provides an empirical analysis of economic and political determinants of gasoline and diesel prices for about 200 countries over the period 1991-2010. A range of both political and economic variables are found to systematically influence fuel prices, and in ways that differ systematically with countries’ per-capita income levels. For democracies, the analysis finds that fuel prices correlate positively with both duration of democracy and tenure of democratic leaders. In non-democratic societies there is more often no such relationship or it is the opposite of that for democracies. Regime switches -- transitions from non-democratic to democratic government, or vice versa -- reduce fuel prices. Fuel prices are also lower for more corrupt, or more centralized, governments. Higher levels of gross domestic product per capita lead to higher fuel prices, while export income from selling fossil fuels reduces these prices dramatically. Higher motor fuel consumption also appears to reduce fuel prices, most for gasoline. Absolute"pass-through"of crude oil price changes to fuel prices is found to be high on average.

Suggested Citation

  • van Beers, Cees & Strand, Jon, 2013. "Political determinants of fossil fuel pricing," Policy Research Working Paper Series 6470, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6470
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    Cited by:

    1. repec:eee:eneeco:v:66:y:2017:i:c:p:303-312 is not listed on IDEAS
    2. Adams, Samuel & Klobodu, Edem Kwame Mensah & Opoku, Eric Evans Osei, 2016. "Energy consumption, political regime and economic growth in sub-Saharan Africa," Energy Policy, Elsevier, vol. 96(C), pages 36-44.
    3. Kpodar, Kangni & Abdallah, Chadi, 2017. "Dynamic fuel price pass-through: Evidence from a new global retail fuel price database," Energy Economics, Elsevier, vol. 66(C), pages 303-312.
    4. repec:eee:eneeco:v:64:y:2017:i:c:p:91-104 is not listed on IDEAS

    More about this item

    Keywords

    Energy Production and Transportation; Transport Economics Policy&Planning; Economic Theory&Research; Emerging Markets; Transport and Environment;

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