The author traces the development of petroleum commodity markets, then examines the quest by producers and consumers for stability in world oil markets. He finds that modest producer and consumer gains can be realized through negotiations that achieve removal of barriers to trade, elimination of hurdles to foreign investment, and strengthening of financial institutions.

This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.

This paper assesses the dynamic pass-through of crude oil price shocks to retail fuel prices using a novel database on monthly retail fuel prices for 162 countries. The impulse response functions suggest that on average, a one cent increase in crude oil prices per liter translates into a 1.2 cent increase in the retail gasoline price at peak level six months after the shock. However, the estimates vary significantly across country groups, ranging from about 0.5 cent in MENA countries to two cents in advanced economies. The results also show that positive oil price shocks have a larger impact than negative price shocks on the retail gasoline price. Finally, the paper underscores the importance of the new dataset in refining estimates of the fiscal cost of incomplete pass-through.

This study analyses the effect of competition on retail fuel prices in a small EU country with high market concentration. The researchers use a panel data set to estimate a fuel price equation that includes supply and demand factors as well as time fixed effects. The study finds that more competitors in the local market decrease prices, whereas high market share of oligopoly brands does not condition this effect. Additionally, independent brands set lower prices than wholesalers, and gas stations located near borders of almost all neighboring countries are associated with higher prices. The study suggests that regulation restricting the entry of oligopoly suppliers may not decrease prices and can even be associated with price increases in the absence of strong market players in the retail fuel market. It also indicates that policy should encourage fiercer competition in the local market by increasing the density of gas stations, especially from independent brands. The lack of significant impact of oligopoly brands on retail fuel prices in this country is due to heightened competitive pressures in the market, which prevent oligopoly brands from exerting their market power significantly. These findings may be associated with specific country characteristics.