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The Spanish Gasoline Market: From Ceiling Regulation to Open Market Pricing

Abstract:
This paper examines the evolution of the Spanish gasoline market from the abolition of the state oil monopoly (January 1993) to "complete" liberalisation (October 1998). With the restructuring of the Spanish oil sector during the 1980s and early 1990s, a highly concentrated oligopoly emerged in the automotive fuels market. A system of price ceilings replaced the state administered prices in July 1990. Since then, new domestic and foreign operators have entered the market, particularly along the coast, near import terminals. Prices went up and then declined. These developments can be explained by an interplay of factors such as: the gradual decline in co-operation among the Spanish firms; the loss of market share of the largest of these, Repsol; the entry of independent operators and supermarkets; and the impact of the ceiling price system. By mid-1998 this system was abolished as the government considered it an "impediment" to further market liberalisation. However, some crucial barriers to the entry of new suppliers remain.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation; Energy Modeling – Energy Data, Modeling, and Policy Analysis

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination

Keywords: Competition, Regulation, gasoline prices, Spanish gasoline market

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No4-1


Published in Volume20, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.