Abstract
It has been argued that retail gasoline prices adjust more quickly to crude oil price increases than to price decreases. We investigate this issue using the statewide data on weekly retail gasoline prices in the United States between January 2000 and June 2007. Our analysis does not confirm the prediction that gasoline prices adjust more quickly to price increases in crude oil prices. On the contrary, the results suggest that in some geographic areas gasoline prices could change faster when crude oil prices decrease. These findings suggest that a national or a one size fits all energy policy for the United States may be misguided.
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Notes
Our model closely follows Borenstein et al. (1997), but our analysis mostly concentrates on logarithms of prices rather than on nominal prices.
The results for the level data are available upon request.
The estimates of these dummy coefficients are available upon request.
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Acknowledgment
The authors wish to thank Professor David A. Dilts for his helpful comments. Naturally, any remaining error(s) are the responsibility of the authors.
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Adilov, N., Samavati, H. Pump Prices and Oil Prices: A Tale of Two Directions. Atl Econ J 37, 51–64 (2009). https://doi.org/10.1007/s11293-008-9152-8
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DOI: https://doi.org/10.1007/s11293-008-9152-8