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Do gasoline prices respond to non-US and US oil supply shocks?

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  • Wensheng Kang
  • Fernando Perez de Gracia
  • Ronald A. Ratti

Abstract

This paper extends previous literature that investigates the impact of crude oil prices on US gasoline prices using a structural vector autoregressive model of the global crude oil market. In particular, we disentangle the global oil production into non-US and US oil production and we examine whether real gasoline prices respond to non-US and US oil supply shocks using monthly data from October 1973 to February 2018. It shows that non-US (US) oil supply disruptions generate nonsignificant (significantly positive) effects on the real price of oil and real price of gasoline. The effect of non-US (US) oil supply shocks on the real price of gasoline has been declining (rising) over time.

Suggested Citation

  • Wensheng Kang & Fernando Perez de Gracia & Ronald A. Ratti, 2021. "Do gasoline prices respond to non-US and US oil supply shocks?," Applied Economics, Taylor & Francis Journals, vol. 53(56), pages 6488-6496, December.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:56:p:6488-6496
    DOI: 10.1080/00036846.2021.1946473
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    Cited by:

    1. Mamipour, Siab & Salem, Ali Asghar & Sayadi, Mohammad & Azizkhani, Masoumeh, 2023. "Retail gasoline pricing in a subsidized energy market: An empirical analysis from AIDS model for Iran," Energy Policy, Elsevier, vol. 183(C).

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