Negative oil price shocks transmission: The comparative effects of the GFC, shale oil boom, and Covid-19 downturn on French gasoline prices

This article analyzes the transmission mechanisms between oil prices and fuel prices in France over the period 2005-2020. The econometric procedure focuses on three singular years marked by significant negative oil prices shocks: 2008 (the global financial crisis), 2014 (the sharp drop in prices due to the boom of US shale oil), 2020 (Covid-19 economic downturn). To analyze the linkages between oil and fuel prices, we use the ARDL bounds testing approach of cointegration with weekly data between January 7, 2005 and October 30, 2020. We find that over the entire period, fuel distributors report increases in oil prices more than decreases. We find that this asymmetry is highest in 2008. Our paper provides some policy recommendations based on our findings.