The Dynamic Effects of Crude Oil and Natural Gas Prices on Iran's Methanol

Majid Delavari and Nadiya Gandali Alikhani ()

MPRA Paper from University Library of Munich, Germany

Abstract: Petroleum and petrochemicals prices movements have always been at the core of economic research agenda not only because of its crucial effect on the cash flows of oil-related businesses, but also due to the far-reaching implications of oil price uncertainty on the macro-economy and the financial markets. It is not surprising therefore that in the energy economics literature there is a plethora of empirical studies examining the issue of modeling movements and risk management. As a case study, this paper investigates the dynamic relationship between Iran’s crude oil price, natural gas price and methanol price which is one of the most important non-oil exports of the oil-exporting country. To do so, the weekly data from first week of 2005:1 to the third week 2013:5 in a VECM framework is applied. The results show that in the long-run, oil and gas prices hikes leads to proportional increase in methanol price while in the short-run, this impact is not significant.

Keywords: Methanol Price; Crude Oil Price; Natural Gas Price; VECM Model (search for similar items in EconPapers)
JEL-codes: C13 C32 Q43 (search for similar items in EconPapers)
Date: 2013-01-12
New Economics Papers: this item is included in nep-ara and nep-ene
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