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