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Examining the nature of the relationship between Tapis crude oil and Singapore petrol prices

Journal Article


Abstract


  • Fuel prices play a crucial role in the supply side of many economies

    across the globe. Hence, it is important to ensure that fuel pricing is efficient

    and free from any asymmetric behaviour. This paper examines the long- and

    short-run relationships between the price of unleaded petrol in Singapore

    (Mogas95) and the price of Tapis crude oil using 4,929 daily observations

    (4 June 1993–25 April 2012). As expected, we found that these two key energy

    indicators are cointegrated. We then developed a modelling framework that

    allowed us to test for adjustment asymmetries that distinguish between the size

    and sign of disequilibria, proxied by three different error correction terms. We

    found no significant evidence of any asymmetric pricing behaviour and market

    inefficiency. However, our results revealed a significant weekly cyclical

    pattern, with petrol being more expensive on Thursdays/Fridays than the rest of

    the week.

Publication Date


  • 2013

Citation


  • Valadkhani, A., O'Brien, M. & Arjomandi, A. (2013). Examining the nature of the relationship between Tapis crude oil and Singapore petrol prices. International Journal of Global Energy Issues, 36 (1), 27-41.

Scopus Eid


  • 2-s2.0-84883006802

Ro Metadata Url


  • http://ro.uow.edu.au/buspapers/198

Number Of Pages


  • 14

Start Page


  • 27

End Page


  • 41

Volume


  • 36

Issue


  • 1

Abstract


  • Fuel prices play a crucial role in the supply side of many economies

    across the globe. Hence, it is important to ensure that fuel pricing is efficient

    and free from any asymmetric behaviour. This paper examines the long- and

    short-run relationships between the price of unleaded petrol in Singapore

    (Mogas95) and the price of Tapis crude oil using 4,929 daily observations

    (4 June 1993–25 April 2012). As expected, we found that these two key energy

    indicators are cointegrated. We then developed a modelling framework that

    allowed us to test for adjustment asymmetries that distinguish between the size

    and sign of disequilibria, proxied by three different error correction terms. We

    found no significant evidence of any asymmetric pricing behaviour and market

    inefficiency. However, our results revealed a significant weekly cyclical

    pattern, with petrol being more expensive on Thursdays/Fridays than the rest of

    the week.

Publication Date


  • 2013

Citation


  • Valadkhani, A., O'Brien, M. & Arjomandi, A. (2013). Examining the nature of the relationship between Tapis crude oil and Singapore petrol prices. International Journal of Global Energy Issues, 36 (1), 27-41.

Scopus Eid


  • 2-s2.0-84883006802

Ro Metadata Url


  • http://ro.uow.edu.au/buspapers/198

Number Of Pages


  • 14

Start Page


  • 27

End Page


  • 41

Volume


  • 36

Issue


  • 1