Oil price distortion and its impact on green economic efficiency in China’s transportation: A spatial effect perspective

Abstract

China's oil prices have been supervision for a long time, which has led to oil price distortion (OPD) to some extent. To figure out whether OPD will impede the sustainability of energy, economy, and environment (measured by green economic efficiency (GEE)), this research first estimates OPD from 2003 to 2019. Then, using a non-radial direction distance function under nonconvex technology assumptions, this research calculates the provincial GEE by incorporating capital, labor, energy, and environment efficiencies into a unified framework. Furthermore, the OPD-GEE nexus and their influencing channels are analyzed using the spatial Durbin model. The results indicate that there are serious OPD and the average GEE in the transportation is relatively low. Local OPD correction can improve local GEE but OPD correction in spatially related regions will cause local GEE loss. The heterogeneity analysis implies that the GEE promotion effect resulting from local OPD correction is greater in oil-rich regions, new energy vehicle pilot regions, and regions with water transport. Furthermore, the mechanism analysis implies that OPD correction can improve local GEE through optimizing energy structure, mitigating resource mismatch, and promoting green technological progress; meanwhile, OPD correction in spatially adjacent regions can cause local GEE losses by exacerbating their resource mismatch. This study offers a new understanding of the impact of OPD on GEE and contributes to the promotion of sustainable development through market-oriented price reforms.