The impacts of globalization on the world economy

Resumen

Algeria’s refined oil products market exhibits a pronounced structural duality: the country is simultaneously one of Africa’s major hydrocarbon exporters and a growing net importer of refined petroleum products. This paper extends the limited empirical literature on Algeria’s downstream energy demand by estimating price and income elasticities specifically for refined petroleum products over 2000–2023 distinct from prior studies that focus on aggregate energy or CO₂–energy relationships. Using an ARDL (1,1,0,1) bounds-testing specification with three core regressors real fuel price index, real GDP per capita, and the registered vehicle fleet complemented by a real Brent crude price control to assess potential price endogeneity, we estimate a long-run price elasticity of −0.218 and an income elasticity of 0.872. Unit root tests (ADF and Phillips-Perron), multicollinearity diagnostics (VIF), and structural stability tests (CUSUM, CUSUMSQ) confirm the validity of the specification. The error correction term ECM (−1) = −0.312 indicates that approximately 31.2 percent of any deviation from long-run equilibrium is corrected annually, implying roughly three years for full demand adjustment to a price reform shock. Robustness is confirmed across six alternative specifications, including a Brent crude price control that shows minimal endogeneity bias. The econometric analysis is integrated with a comprehensive value-chain assessment of Algeria’s refining and distribution system, a characterisation of four structural distortions administered pricing, fuel smuggling, refinery investment gaps, and fiscal sustainability concerns and comparative evidence from Kazakhstan, Iran, Egypt, and Indonesia. A graduated, rules-based price reform roadmap supported by targeted cash transfers is proposed as the most feasible pathway toward market normalisation.