Correlation of oil prices and gasoline prices

The chart on this page shows the correlation of retail gasoline prices with world oil prices. The idea is to see to what extent changes to oil prices carry over to changes in gasoline prices in various countries.

We use weekly data for 52 weeks ending with the latest data point from here. As new data are entered into our data base each week, we recalculate the numbers on the chart. The correlation is between the gasoline prices in a given week and the average of the oil prices in the last three weeks. The average is necessary as it takes about three weeks for changes to oil prices to filter through retail fuel prices even in the most open and liberalized markets.

We use Brent for the oil prices. Although WTI is more relevant for Canada and the U.S., Brent and WTI are highly correlated and using one or the other for computing correlations with fuel prices gives the same results.

A somewhat striking observation from the exercise is that there are quite a few countries with negative correlation. The circumstances in each of them are different but often in that group are countries with some economic and monetary instability. They may have high inflation and depreciating exchange rate which push up fuel prices. If that happens during a period of declining oil prices, then we observe a negative correlation.

At the other end are generally countries with liberalized fuel markets where the retail prices adjust rapidly to market conditions. We also see countries with regulated prices where the government responds rapidly to oil price changes by passing the oil price changes to retail prices.

In the mid-range of the chart are countries with a greater disconnect between oil prices and fuel prices. That is typically due to price regulation combined with a lower frequency of price level adjustment. Omitted from the chart are several countries where prices have not changed at all during the past year. We cannot compute the correlation for them as the variances of their gasoline prices is zero. A list of these countries can be seen here.


Kyrgyzstan
Malawi
Ivory Coast
Burma
Barbados
Sri Lanka
Colombia
Egypt
Argentina
India
Zambia
Kenya
Poland
Mozambique
Georgia
Belarus
Israel
Sierra Leone
Mauritius
Cameroon
Fiji
Uruguay
Hong Kong
Mexico
Benin
Ecuador
Cayman Islands
Turkey
Namibia
Ghana
Dom. Rep.
Rwanda
Ukraine
Mayotte
Laos
Iceland
Costa Rica
Tanzania
Russia
Ireland
Chile
Peru
Japan
Brazil
Suriname
Grenada
Indonesia
Denmark
Taiwan
Canada
South Africa
Lesotho
Puerto Rico
Serbia
Zimbabwe
Sweden
Jordan
Bulgaria
Moldova
Romania
Luxembourg
USA
UAE
Australia
Belgium
Croatia
Thailand
El Salvador
Nepal
Finland
N. Maced.
Vietnam
Lebanon
Cambodia
Curacao
Cape Verde
Philippines
France
Pakistan
Switzerland
Norway
Bosnia & Herz.
Guatemala
South Korea
Czech Republic
UK
Panama
China
Germany
New Zealand
Estonia
Greece
Singapore
Cyprus
Latvia
Lithuania
Portugal
Montenegro
Slovakia
Honduras
Hungary
Aruba
Austria
Jamaica
Italy
Spain
Andorra
Slovenia
Netherlands


This site uses cookies.
Learn more here


OK