The Short Run and Long Run Dynamic Analysis of Crude Oil Price on Methanol: The Case Study of Iran

Subject Areas : Applied Economics

علی اکبر نیکواقبال ¹ , نادیا گندلی علیخانی ² , اسماعیل نادری ³

1 - ندارد
2 - مسئول مکاتبات
3 - ندارد

Received: 2013-11-11 Accepted : 2014-01-22 Published : 2013-03-21

Keywords: oil price, Methanol Price, VECM,

Abstract :

The survey of energy, as a strategic commodity in the world and also how to analyze the effect of changes prices on the key its factors in the economy, has always been important. The significance of this case in IRAN is multiplied, because the policy making in this country as one of huge owners of energy resources in the world, is not only effective on domestic and foreign petroleum price, but also will be effective on other variables in the economy. On the other hand, non-oil export expansion has been attempted by policy makers in recent decades, following the increasing volatility of oil prices and its export revenue. Accordingly, methanol, as one of the most used petrochemical products, has great potential in the field of production and non-oil exports in that country.        The main aim of this survey is short- run and long run relationships between crude oil and methanol prices from last week of 1387/10 to last week of 1390/6.  To do so, the VECM model has been used. Our findings suggest that there is a significant long-run relationship between crude oil and methanol prices, while this is not true in the short run. So, petrochemical companies must always regulate the oil price fluctuations in order to control their product markets, because the stability of foreign exchange earnings from methanol exports as one of non-oil exports items is faced with uncertainty, with increasing crude oil price changes.