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The Impact Of Clean Fuel Specifications On Adelaide Retail Petrol Prices




In March 2001, the South Australian Government introduced a clean fuel policy which it claimed was designed to protect air quality. This paper quantifies the policy's impact on relative Adelaide retail prices for unleaded petrol through Box-Jenkins autoregressive integrated moving average methodology coupled with Box and Tiao intervention analysis. The analysis uses weekly price data spanning from January 2000 until the beginning of June 2002. It finds the clean fuel policy had a statistically significant impact on relative retail petrol prices, resulting in an increase of almost 1.9 cents per litre and, therefore, costing Adelaide motorists around an extra $15.8 million per annum. Based on claims that the quality of fuel produced by the local Adelaide refiner did not change in response to the implementation of the clean fuel policy, the paper concludes that the increase in relative retail petrol prices was most likely associated with the exercise of market power rather than an increase in refinery production costs. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd/University of Adelaide and Flinders University.

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  • Alistair Davey, 2009. "The Impact Of Clean Fuel Specifications On Adelaide Retail Petrol Prices ," Australian Economic Papers, Wiley Blackwell, vol. 48(1), pages 1-18, March.
  • Handle: RePEc:bla:ausecp:v:48:y:2009:i:1:p:1-18

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    References listed on IDEAS

    1. Sarath Delpachitra & Diana Beal, 2002. "Petrol Prices Disparity: Did The Removal Of Price Surveillance Create Price Competition?," Economic Papers, The Economic Society of Australia, vol. 21(1), pages 56-65, March.
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    4. Delpachitra, Sarath B., 2002. "Price rigidity in the downstream petroleum industry in New Zealand: where does it happen?," Energy Economics, Elsevier, vol. 24(6), pages 597-613, November.
    5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    6. Shepard, Andrea, 1990. "Pricing Behavior and Vertical Contracts in Retail Markets," American Economic Review, American Economic Association, vol. 80(2), pages 427-431, May.
    7. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    8. Joseph J. Spengler, 1950. "Vertical Integration and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 58, pages 347-347.
    9. Newey, Whitney K & West, Kenneth D, 1987. "Hypothesis Testing with Efficient Method of Moments Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 777-787, October.
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    Cited by:

    1. Alistair Davey, 2013. "Estimating The Price Impact of the Victorian Terminal Gate Pricing Scheme," Australian Economic Papers, Wiley Blackwell, vol. 52(1), pages 19-37, March.

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