Fuel price determination in transportation sector using predicted energy and transport demand

This study determines fuel price based on estimated sectoral energy and transport demand using pumping prices. Three approaches are first used for estimating energy and transportation demand based on linear time series, polynomial time series and genetic algorithm based (GATEDE and GATDETR), as multi-parameter, models. Then, future fuel prices and marginal costs of the energy consumption are obtained. Transport demand-based energy efficiency methods are also developed. The fuel prices (FP) are analyzed under two scenarios: Linear and exponential price scenarios. Results showed that if the FP increases linearly, the marginal cost will slightly decreases from current trend, but will increases if demand increases exponentially. Results also showed that the demand-based pricing policy would help to develop a new pricing policy for fuel use in order to control fast growing demand on this sector. The exponential price increase would also help to locate financial sources to create environmentally friendly transportation systems. © 2005 Elsevier Ltd. All rights reserved