Oil Price Risks and Pump Price Adjustments
Between 1999 and 2008, world oil prices more than quadrupled in real terms. For oil importers, vulnerability to oil price increases, defined as the share of gross domestic product spent on net oil imports, rose considerably. Considering medians, lo...
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| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2012/10/16831268/oil-price-risks-pump-price-adjustments http://hdl.handle.net/10986/12062 |
| Summary: | Between 1999 and 2008, world oil prices
more than quadrupled in real terms. For oil importers,
vulnerability to oil price increases, defined as the share
of gross domestic product spent on net oil imports, rose
considerably. Considering medians, low-income countries had
the highest vulnerability in 2008 and the highest increase
in vulnerability between 1999 and 2008. When changes in
vulnerability were decomposed into several contributing
factors, more than two-thirds of 170 countries studied were
found to have offset the increase in the value of oil
consumption by reducing the oil intensity of gross domestic
product. Oil intensity fell in more than half the countries
in every income group and in every region of the world,
driven by falling energy intensity and, to a lesser extent,
the oil share of energy. This study also examines the degree
of pass-through to consumers of increases in world prices of
gasoline, diesel, kerosene, and liquefied petroleum gas
between January 2009 and January 2012, when oil prices in
nominal U.S. dollars more than doubled. Retail fuel prices
varied by two orders of magnitude in 2012, and oil-exporting
countries were far less likely to pass on price increases.
Gasoline had the highest pass-through, followed by diesel,
liquefied petroleum gas, and kerosene. The median
pass-through increased with income for gasoline, diesel, and
kerosene, but was highest in low-income countries for
liquefied petroleum gas. Despite divergent pricing policies,
the pass-through coefficients of different fuels were
strongly positively correlated, suggesting that the degrees
to which domestic prices tracked world prices were
comparable for the four fuels in many countries. |
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