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Political determinants of fossil fuel pricing, Volume 1
 
Author:van Beers, Cees; Strand, Jon; Country:World;
Date Stored:2013/05/31Document Date:2013/05/01
Document Type:Policy Research Working PaperSubTopics:Energy Production and Transportation; Transport Economics Policy & Planning; Transport and Environment; Economic Theory & Research; Emerging Markets
Language:EnglishRegion:The World Region
Report Number:WPS6470Collection Title:Policy Research working paper ; no. WPS 6470
Volume No:1  

Summary: 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.

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