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Pump Prices and Oil Prices: A Tale of Two Directions

  • Nodir Adilov


  • Hedayeh Samavati


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    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. Copyright International Atlantic Economic Society 2009

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    Article provided by International Atlantic Economic Society in its journal Atlantic Economic Journal.

    Volume (Year): 37 (2009)
    Issue (Month): 1 (March)
    Pages: 51-64

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    Handle: RePEc:kap:atlecj:v:37:y:2009:i:1:p:51-64
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    1. Godby, R. & Stengos, T. & Wandsschneider, B., 1997. "Testing for Asymmetric Pricing in the Canadian Retail Gasoline Market," Working Papers 1997-4, University of Guelph, Department of Economics and Finance.
    2. Asplund, Marcus & Eriksson, Rickard & Friberg, Richard, 2000. " Price Adjustments by a Gasoline Retail Chain," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 101-21, March.
    3. Sam Peltzman, 1998. "Prices Rise Faster Than They Fall," University of Chicago - George G. Stigler Center for Study of Economy and State 142, Chicago - Center for Study of Economy and State.
    4. Radchenko, Stanislav, 2005. "Oil price volatility and the asymmetric response of gasoline prices to oil price increases and decreases," Energy Economics, Elsevier, vol. 27(5), pages 708-730, September.
    5. Lance J. Bachmeier & James M. Griffin, 2003. "New Evidence on Asymmetric Gasoline Price Responses," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 772-776, August.
    6. Borenstein, Severin & Cameron, A Colin & Gilbert, Richard, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 305-39, February.
    7. Benabou, Roland & Gertner, Robert, 1993. "Search with Learning from Prices: Does Increased Inflationary Uncertainty Lead to Higher Markups?," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 69-94, January.
    8. Bakytzhanova Zhuldyz, 2005. "Asymmetric fuel pricing in transition economies: The case of Moscow," EERC Working Paper Series 05-18e, EERC Research Network, Russia and CIS.
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