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Exploring the Core Factors and its Dynamic Effects on Methanol Price: Empirical Evidence from Iran

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Author Affiliations

  • 1of Economics Science and Research Branch, Islamic Azad University, Khouzestan, IRAN
  • 2 Economics, Faculty of Economic, University of Tehran, IRAN

Res. J. Recent Sci., Volume 4, Issue (2), Pages 107-113, February,2 (2015)

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.

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