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Estimating the supply and demand of gasoline using tax data

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  • Coyle, David
  • DeBacker, Jason
  • Prisinzano, Richard

Abstract

We estimate supply and demand functions for the U.S. gasoline market using information from excise tax returns provided by the IRS for the period 1990–2009. We find price and income elasticities of demand similar to those found using EIA data. We find a price elasticity of supply of 0.29, which differs from the common assumption of a perfectly inelastic short-run supply curve. By using a novel data source, the analysis provides a robustness check of aggregate studies of gasoline demand and a consistent, econometric estimate of the price elasticity of gasoline supply. The results are useful in guiding tax and regulatory policies regarding gasoline consumption.

Suggested Citation

  • Coyle, David & DeBacker, Jason & Prisinzano, Richard, 2012. "Estimating the supply and demand of gasoline using tax data," Energy Economics, Elsevier, vol. 34(1), pages 195-200.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:1:p:195-200
    DOI: 10.1016/j.eneco.2011.07.011
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    6. Burke, Paul J. & Nishitateno, Shuhei, 2013. "Gasoline prices, gasoline consumption, and new-vehicle fuel economy: Evidence for a large sample of countries," Energy Economics, Elsevier, vol. 36(C), pages 363-370.
    7. Gabriel E. Lade & C.-Y. Cynthia Lin Lawell, 2021. "The Design of Renewable Fuel Mandates and Cost Containment Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 213-247, June.
    8. Nguyen-Ones , Mai & Steen, Frode, 2018. "Market Power in Retail Gasoline Markets," Discussion Paper Series in Economics 21/2019, Norwegian School of Economics, Department of Economics, revised 01 Jul 2019.
    9. Shamsul, N.S. & Kamarudin, S.K. & Rahman, N.A., 2017. "Conversion of bio-oil to bio gasoline via pyrolysis and hydrothermal: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 538-549.
    10. Belal E. Baaquie, 2012. "Statistical Microeconomics," Papers 1211.7172, arXiv.org.
    11. Scott, K. Rebecca, 2012. "Rational habits in gasoline demand," Energy Economics, Elsevier, vol. 34(5), pages 1713-1723.
    12. Scheitrum, Daniel, 2017. "Renewable Natural Gas as a Solution to Climate Goals: Response to California's Low Carbon Fuel Standard," MPRA Paper 77193, University Library of Munich, Germany.
    13. Dumortier, Jerome & Kent, Matthew W. & Payton, Seth B., 2016. "Plug-in vehicles and the future of road infrastructure funding in the United States," Energy Policy, Elsevier, vol. 95(C), pages 187-195.
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    16. Baaquie, Belal E., 2013. "Statistical microeconomics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(19), pages 4400-4416.
    17. Emmanuel Flavian Sapnken & Jean Gaston Tamba & Salome Njakomo Essiane & Francis Djanna Koffi & Donatien Njomo, 2018. "Modeling and Forecasting Gasoline Consumption in Cameroon using Linear Regression Models," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 111-120.
    18. Baaquie, Belal E. & Du, Xin & Tanputraman, Winson, 2015. "Empirical microeconomics action functionals," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 428(C), pages 19-37.
    19. Ghoddusi, Hamed, 2017. "Blending under uncertainty: Real options analysis of ethanol plants and biofuels mandates," Energy Economics, Elsevier, vol. 61(C), pages 110-120.
    20. Baratsas, Stefanos G. & Niziolek, Alexander M. & Onel, Onur & Matthews, Logan R. & Floudas, Christodoulos A. & Hallermann, Detlef R. & Sorescu, Sorin M. & Pistikopoulos, Efstratios N., 2022. "A novel quantitative forecasting framework in energy with applications in designing energy-intelligent tax policies," Applied Energy, Elsevier, vol. 305(C).
    21. Lade, Gabriel E & Lawell, C-Y Cynthia Lin, 2015. "Mandating green: On the Design of Renewable Fuel Policies and Cost Containment Mechanisms," Institute of Transportation Studies, Working Paper Series qt5zj382t4, Institute of Transportation Studies, UC Davis.
    22. Bigerna, S. & Bollino, C.A. & Micheli, S. & Polinori, P., 2017. "Revealed and stated preferences for CO2 emissions reduction: The missing link," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1213-1221.

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    More about this item

    Keywords

    Gasoline demand; Gasoline supply; Excise taxes;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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