Oil and Pump Prices: Is There Any Asymmetry in the Greek Oil Downstream Sector?

27 Pages Posted: 5 Sep 2019

See all articles by Zacharias Bragoudakis

Zacharias Bragoudakis

Bank of Greece; National and Kapodistrian University of Athens, Department of Economics

Stavros Antonios Degiannakis

Department of Economic and Regional Development, Panteion University of Political and Social Sciences

George Filis

Bournemouth University

Date Written: August 29, 2019

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.

Keywords: oil price shocks, fuel prices, asymmetric responses, rockets and feathers, pass-through

JEL Classification: C22, C32, D40, Q41

Suggested Citation

Bragoudakis, Zacharias and Degiannakis, Stavros Antonios and Filis, George, Oil and Pump Prices: Is There Any Asymmetry in the Greek Oil Downstream Sector? (August 29, 2019). Available at SSRN: https://ssrn.com/abstract=3444840 or http://dx.doi.org/10.2139/ssrn.3444840

Zacharias Bragoudakis

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece
+302103203605 (Phone)

National and Kapodistrian University of Athens, Department of Economics ( email )

Sofocleous 1
Athens, 105 59
Greece
+30 21 0368 9400 (Phone)

HOME PAGE: http://www.econ.uoa.gr/

Stavros Antonios Degiannakis (Contact Author)

Department of Economic and Regional Development, Panteion University of Political and Social Sciences ( email )

136 Sygrou
Athens
Greece

George Filis

Bournemouth University ( email )

Fern Barrow
Poole BH12 5BB, Dorset BH8 8EB
United Kingdom

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