Analyses of cointegration & error correction model between increase of private automobiles and consumption of petroleum in China

Dramatical increase of private automobiles speeds up the consumption and the demand of petroleum. Based on time-series data of private automobiles and petroleum consumption of China from 1990 to 2008, this paper carries on cointegration test and Granger Causality Test, and sets up an error correction model to quantitatively analyse the relationship of the short-term fluctuation and the long-term equilibrium between private automobiles and consumption of petroleum. The result indicates there is an unidirectional Granger causal relationship and a long-term equilibrium relationship between the two variables, the mechanism of the long-term equilibrium has the intense restriction function to the consumption of petroleum.