Asymmetric Reactions of Retail Gasoline Prices on the Changes in Crude Oil Prices in Chosen US Cities

Konferenzbeitrag

Many empirical studies state that retail gasoline and diesel prices react more quickly when the crude oil price rises rather than decreases. In the paper, we confirm these asymmetric reactions of retail fuel prices in selected cities in the United States of America. We use the adjustment cost function in the linear-exponential form to derive nonlinear retail gasoline and diesel reaction functions. The correspondent model is estimated with the system's generalised method of moments. The model allows us to compute average one-gallon gasoline and diesel price biases from the increase in oil by one dollar per barrel caused by the given asymmetric reactions. The average biases differ from city to city; their values are between 0.02 cents in Los Angeles and 0.44 cents in Cleveland.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: In: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Hybrid Conference, Opatija, Croatia, 17-18 June 2022 ; Year: 2022 ; Pages: 9-15 ; Zagreb: IRENET - Society for Advancing Innovation and Research in Economy

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models: Single Variables: Instrumental Variables (IV) Estimation ; Model Construction and Estimation ; Energy: Demand and Supply; Prices
• Subject: asymmetry ; retail gasoline and diesel prices ; linex adjustment cost function ; generalised system method of moments

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Szomolányi, Karol ; Lukáčik, Martin ; Lukáčiková, Adriana
• Event: Veröffentlichung
• (who): IRENET - Society for Advancing Innovation and Research in Economy
• (where): Zagreb
• (when): 2022

Further information

• DOI: doi:10.54820/entrenova-2022-0002
• Handle: http://hdl.handle.net/10419/268310
• Last update: 10.03.2025, 11:44 AM CET