The retailed gasoline price in China: Time-series analysis and future trend projection

Shiqi Ou; Zhenhong Lin; Guoquan Xu; Xu Hao; Hongwei Li; Zhiming Gao; Xin He; Steven Przesmitzki; Jessey Bouchard

doi:10.1016/j.energy.2019.116544

The retailed gasoline price in China: Time-series analysis and future trend projection

Shiqi Ou, Zhenhong Lin, Guoquan Xu, Xu Hao, Hongwei Li, Zhiming Gao, Xin He, Steven Przesmitzki, Jessey Bouchard

Multifunctional Equipment Integration

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Abstract

This study introduces a method to systematically project retailed gasoline prices in China and provides projection results. Based on oil taxation and pricing mechanisms in China, this study establishes the statistical relationship between the retailed gasoline prices in China and international crude oil prices using error correction models (ECM), time-series models. Detailed comparison among asymmetric ECM, threshold ECM, and threshold asymmetric ECM are provided. By adopting the ECMs, the study projects the retailed gasoline prices from 2019 to 2050 based on the international crude oil prices from the Annual Energy Outlook provided by the U.S. Energy Information Administration. The results show that the asymmetric responsiveness and the threshold effect exist under current Chinese oil pricing policy with a lag of one month or even shorter in gasoline price adjustment. Moreover, the analysis informs one that, in the short-run, the retailed gasoline prices in China are more sensitive to international crude oil price increases; while in the long-run, the retailed gasoline prices are more sensitive to international crude oil price decreases. Compared with the national average gasoline price in China of 6.04 CNY/Liter in 2017, the national average gasoline price in China is projected to be about 7.64 CNY/Liter (2017 dollar) by 2050.

Original language	English
Article number	116544
Journal	Energy
Volume	191
DOIs	https://doi.org/10.1016/j.energy.2019.116544
State	Published - Jan 15 2020

Funding

The authors would like to thank Aramco Services Company for their generous financial support for this study, and the China Automotive Technology and Research Center for their data support. This research was conducted at the National Transportation Research Center, a Department of Energy User Facility operated by the Oak Ridge National Laboratory under contract DE-AC05-00OR22725. The research conducted by Dr. Guoquan Xu was sponsored by Beijing Institute of Technology Research Fund No. 20182142001. The authors are solely responsible for the views expressed in this study. The authors would like to thank Aramco Services Company for their generous financial support for this study, and the China Automotive Technology and Research Center for their data support. This research was conducted at the National Transportation Research Center , a Department of Energy User Facility operated by the Oak Ridge National Laboratory under contract DE-AC05-00OR22725 . The research conducted by Dr. Guoquan Xu was sponsored by Beijing Institute of Technology Research Fund No. 20182142001 . The authors are solely responsible for the views expressed in this study. Appendix Appendix Table. a Average Retailed Gasoline Prices in China (CNY/Liter) [45] . Appendix Table. a Month Price Month Price Month Price Month Price Jan-11 6.931 Jan-13 7.047 Jan-15 6.177 Jan-17 6.171 Feb-11 6.710 Feb-13 7.047 Feb-15 5.966 Feb-17 6.171 Mar-11 6.709 Mar-13 7.038 Mar-15 5.888 Mar-17 6.114 Apr-11 7.080 Apr-13 7.038 Apr-15 6.117 Apr-17 6.103 May-11 7.080 May-13 6.784 May-15 6.309 May-17 5.920 Jun-11 7.080 Jun-13 6.825 Jun-15 6.246 Jun-17 5.854 Jul-11 7.080 Jul-13 6.872 Jul-15 6.246 Jul-17 5.713 Aug-11 7.080 Aug-13 6.872 Aug-15 5.690 Aug-17 5.819 Sep-11 7.080 Sep-13 7.067 Sep-15 5.667 Sep-17 5.874 Oct-11 6.860 Oct-13 6.996 Oct-15 5.695 Oct-17 5.998 Nov-11 6.860 Nov-13 6.931 Nov-15 5.538 Nov-17 6.349 Dec-11 6.860 Dec-13 7.004 Dec-15 5.440 Dec-17 6.349 Jan-12 6.860 Jan-14 7.004 Jan-16 5.357 Jan-18 6.054 Feb-12 7.087 Feb-14 7.066 Feb-16 5.357 Feb-18 6.049 Mar-12 7.511 Mar-14 6.956 Mar-16 5.357 Mar-18 6.045 Apr-12 7.528 Apr-14 7.066 Apr-16 5.424 Apr-18 6.164 May-12 7.288 May-14 7.026 May-16 5.657 May-18 6.366 Jun-12 6.886 Jun-14 7.165 Jun-16 5.733 Jun-18 6.396 Jul-12 6.576 Jul-14 7.123 Jul-16 5.628 Jul-18 6.459 Aug-12 6.866 Aug-14 7.069 Aug-16 5.598 Aug-18 6.572 Sep-12 7.275 Sep-14 7.069 Sep-16 5.635 Sep-18 6.763 Oct-12 7.275 Oct-14 6.921 Oct-16 5.841 Oct-18 6.857 Nov-12 7.053 Nov-14 6.754 Nov-16 5.639 Dec-12 7.047 Dec-14 6.424 Dec-16 6.076 Appendix Table. b Retailed gasoline price (CNY/Liter) in China in 2019–2050 projected with EIA AEO 2018. Appendix Table. b Year Projected by AEM Projected by TEM Projected by TAEM 2019 5.271 5.986 6.021 2020 6.344 6.301 6.338 2021 6.567 6.541 6.564 2022 6.665 6.653 6.664 2023 6.736 6.728 6.735 2024 6.783 6.777 6.782 2025 6.818 6.814 6.818 2026 6.870 6.864 6.869 2027 6.905 6.901 6.905 2028 6.953 6.948 6.953 2029 6.997 6.992 6.997 2030 7.028 7.024 7.027 2031 7.087 7.080 7.086 2032 7.117 7.113 7.116 2033 7.155 7.151 7.155 2034 7.201 7.196 7.201 2035 7.235 7.231 7.234 2036 7.249 7.247 7.248 2037 7.319 7.311 7.318 2038 7.354 7.350 7.354 2039 7.382 7.379 7.382 2040 7.417 7.413 7.417 2041 7.451 7.447 7.450 2042 7.468 7.466 7.468 2043 7.488 7.486 7.488 2044 7.516 7.512 7.515 2045 7.534 7.532 7.534 2046 7.545 7.544 7.545 2047 7.567 7.564 7.566 2048 7.595 7.592 7.594 2049 7.621 7.618 7.621 2050 7.638 7.636 7.638 Notes: The values shown in this Table represent the gasoline prices calculated in January of each year.

Funders	Funder number
Aramco Services Company
China Automotive Technology and Research Center
Department of Energy User Facility
National Transportation Research Center
U.S. Department of Energy
Oak Ridge National Laboratory	DE-AC05-00OR22725
Beijing Institute of Technology
Beijing Institute of Technology Research Fund Program for Young Scholars	20182142001

Keywords

Annual energy outlook
China
Error correction models
Gasoline price projection
Retailed gasoline prices

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.energy.2019.116544

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title = "The retailed gasoline price in China: Time-series analysis and future trend projection",

abstract = "This study introduces a method to systematically project retailed gasoline prices in China and provides projection results. Based on oil taxation and pricing mechanisms in China, this study establishes the statistical relationship between the retailed gasoline prices in China and international crude oil prices using error correction models (ECM), time-series models. Detailed comparison among asymmetric ECM, threshold ECM, and threshold asymmetric ECM are provided. By adopting the ECMs, the study projects the retailed gasoline prices from 2019 to 2050 based on the international crude oil prices from the Annual Energy Outlook provided by the U.S. Energy Information Administration. The results show that the asymmetric responsiveness and the threshold effect exist under current Chinese oil pricing policy with a lag of one month or even shorter in gasoline price adjustment. Moreover, the analysis informs one that, in the short-run, the retailed gasoline prices in China are more sensitive to international crude oil price increases; while in the long-run, the retailed gasoline prices are more sensitive to international crude oil price decreases. Compared with the national average gasoline price in China of 6.04 CNY/Liter in 2017, the national average gasoline price in China is projected to be about 7.64 CNY/Liter (2017 dollar) by 2050.",

keywords = "Annual energy outlook, China, Error correction models, Gasoline price projection, Retailed gasoline prices",

author = "Shiqi Ou and Zhenhong Lin and Guoquan Xu and Xu Hao and Hongwei Li and Zhiming Gao and Xin He and Steven Przesmitzki and Jessey Bouchard",

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doi = "10.1016/j.energy.2019.116544",

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AU - Ou, Shiqi

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AU - Xu, Guoquan

AU - Hao, Xu

AU - Li, Hongwei

AU - Gao, Zhiming

AU - He, Xin

AU - Przesmitzki, Steven

AU - Bouchard, Jessey

PY - 2020/1/15

Y1 - 2020/1/15

N2 - This study introduces a method to systematically project retailed gasoline prices in China and provides projection results. Based on oil taxation and pricing mechanisms in China, this study establishes the statistical relationship between the retailed gasoline prices in China and international crude oil prices using error correction models (ECM), time-series models. Detailed comparison among asymmetric ECM, threshold ECM, and threshold asymmetric ECM are provided. By adopting the ECMs, the study projects the retailed gasoline prices from 2019 to 2050 based on the international crude oil prices from the Annual Energy Outlook provided by the U.S. Energy Information Administration. The results show that the asymmetric responsiveness and the threshold effect exist under current Chinese oil pricing policy with a lag of one month or even shorter in gasoline price adjustment. Moreover, the analysis informs one that, in the short-run, the retailed gasoline prices in China are more sensitive to international crude oil price increases; while in the long-run, the retailed gasoline prices are more sensitive to international crude oil price decreases. Compared with the national average gasoline price in China of 6.04 CNY/Liter in 2017, the national average gasoline price in China is projected to be about 7.64 CNY/Liter (2017 dollar) by 2050.

AB - This study introduces a method to systematically project retailed gasoline prices in China and provides projection results. Based on oil taxation and pricing mechanisms in China, this study establishes the statistical relationship between the retailed gasoline prices in China and international crude oil prices using error correction models (ECM), time-series models. Detailed comparison among asymmetric ECM, threshold ECM, and threshold asymmetric ECM are provided. By adopting the ECMs, the study projects the retailed gasoline prices from 2019 to 2050 based on the international crude oil prices from the Annual Energy Outlook provided by the U.S. Energy Information Administration. The results show that the asymmetric responsiveness and the threshold effect exist under current Chinese oil pricing policy with a lag of one month or even shorter in gasoline price adjustment. Moreover, the analysis informs one that, in the short-run, the retailed gasoline prices in China are more sensitive to international crude oil price increases; while in the long-run, the retailed gasoline prices are more sensitive to international crude oil price decreases. Compared with the national average gasoline price in China of 6.04 CNY/Liter in 2017, the national average gasoline price in China is projected to be about 7.64 CNY/Liter (2017 dollar) by 2050.

KW - Annual energy outlook

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KW - Error correction models

KW - Gasoline price projection

KW - Retailed gasoline prices

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The retailed gasoline price in China: Time-series analysis and future trend projection

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Keywords

UN SDGs

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