Oil Spill(over)s: Linkages in Petroleum Product Pricing Policies in West African Countries

By Mohamed El Harrak, Antonio David, Lorraine Ocampos, Marshall Mills

May 1, 2011

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Mohamed El Harrak, Antonio David, Lorraine Ocampos, and Marshall Mills. Oil Spill(over)s: Linkages in Petroleum Product Pricing Policies in West African Countries, (USA: International Monetary Fund, 2011) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper addresses a number of issues regarding petroleum product pricing in Western Africaemphasizing international spillovers. We use panel unit root rests and long-run modeling based on vector error correction models to assess links and convergence in petroleum product prices across countries. Our results indicate that in general over the long-run there is convergence in prices across the countries. The estimation results for gasoline and diesel prices suggest the presence of long-run links between retail prices among the different country groupings with long-run multipliers ranging from 11 to -6.66. The speed of Adjustment to equilibrium varies significantly according to the countrygroupings considered. In contrast, the econometric results for kerosene prices not only indicate a weaker link between prices across countries, but also a much slower adjustment to equilibrium. Inlight of these important spillovers, the need to better coordinate pricing s and tax policies towards petroleum products at the regional level becomes apparent.

Subject: Commodities, Fuel prices, Inflation, Oil, Oil prices, Price controls, Prices

Keywords: Fuel prices, Gasoline price, IMF country desk, Inflation, International Spillovers, Kerosene price, Oil, Oil price shock, Oil Prices, Petroleum product price, Price controls, Price differential, Smuggling, West Africa, World price, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/102
Stock No:

WPIEA2011102
ISBN:

9781455260379
ISSN:

1018-5941

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