Asymmetry and hysteresis in the Russian gasoline market: The rationale for green energy exports

Abstract

Using monthly data of 79 Russian regions from 2003 to 2017, we study the long-run relationship of the retail gasoline prices with the crude oil price and the nominal exchange rate. We find that models that were successfully applied to deal with asymmetries in other countries are not suitable for Russia without taking structural breaks into account. Once breaks are allowed, we find that there is no asymmetry in the long-run elasticities between the gasoline prices and the crude oil price, and no significant hysteresis. However, there is an asymmetric relation between the gasoline price and the exchange rate that has decreased over time. These results also hold after several robustness checks. The evidence reported in this work shows that the effects of the exchange rate on gasoline prices are much more difficult to control than the oil price, and they require a larger set of policy measures: the recent development of a plan to decrease the importance of hydrocarbons exports by producing clean hydrogen using electrolysis and pyrolysis and the potential future export of electricity generated using nuclear power and onshore wind farms may help to diversify the local economy and to shield it from new sanctions.

Rockets and Feathers in the Gasoline Market: Evidence from South Korea

“…In addition, his findings indicate that oligopolistic coordination is a more appropriate explanation of the observed asymmetry than theories related to the cost of search to consumers. In addition, studies of asymmetry in the gasoline market have been conducted in Italy [12], Greece [13], China [14], United States [15], Brazil [16], Russia [17], Australia [18], South Korea [19][20][21], Europe [22], and many countries [23]. The asymmetry study was applied not only to the gasoline market, but also to the electricity market [24] and the aviation market [25].…”