An empirical analysis of gasoline price convergence for 20 OECD countries

Two decades have passed now since the oil price shocks of the 1970s and since then <p> energy prices have - apart from short periods of price instability - evolved relatively <p> smoothly in the industrialized countries. Energy taxes in many countries differ <p> markedly thereby causing differences in final energy prices, but as similar tax levels <p> are becoming more common, e.g. in the European Union, convergence concerning <p> energy prices might be expected to appear. In the present paper national gasoline <p> price data covering the time period since the 1970s for a sample of OECD countries <p> are used in order to test for this often addressed topic of convergence. The empirical <p> part of the paper applies different time series based tests of convergence, where <p> gasoline prices exhibit convergence for most OECD-Europe countries in the case <p> where US$ is used for measurement of the energy prices indicating a convergence or <p> tax harmonization process is taking place for these countries.