For gas and coal, other country specific factors, particularly the GDP deflator, tend to be more important than for the oil price equation although world oil price is still a major factor. The coefficient 3 would be expected to be less significant and lower
than for oil but must be positive. However in some cases no relationship was found with the oil price: in Canada for both gas and coal, and in the USA for gas. This is thought to be because North American gas (and to a lesser extent coal) produced domestically is not closely linked to world markets, but prices are determined internally. By contrast, in Europe contracts linking gas prices to that of oil, and competition in electricity generation markets, provide stronger links with the oil price. Also in some cases the relationships include world price lagged by one year, indicating inertia in the response to world oil price fluctuations. In many cases, the relationships are very similar for gas and coal, as their prices are generally determined by similar factors.