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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. Thibault Fally & James Sayre, 2018. "Commodity Trade Matters," NBER Working Papers 24965, National Bureau of Economic Research, Inc.
    7. 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.
    8. Prest, Brian C. & Fell, Harrison & Gordon, Deborah & Conway, TJ, 2024. "Estimating the emissions reductions from supply-side fossil fuel interventions," Energy Economics, Elsevier, vol. 136(C).
    9. Neto, David, 2012. "Testing and estimating time-varying elasticities of Swiss gasoline demand," Energy Economics, Elsevier, vol. 34(6), pages 1755-1762.
    10. Frederico Uch a & Cleiton Silva de Jesus & Leonardo Chaves Borges Cardoso, 2020. "Fuel Demand Elasticities in Brazil: A Panel Data Analysis with Instrumental Variables," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 450-457.
    11. Belal E. Baaquie, 2012. "Statistical Microeconomics," Papers 1211.7172, arXiv.org.
    12. Scott, K. Rebecca, 2012. "Rational habits in gasoline demand," Energy Economics, Elsevier, vol. 34(5), pages 1713-1723.
    13. Baaquie, Belal E., 2013. "Statistical microeconomics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(19), pages 4400-4416.
    14. 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.
    15. 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.
    16. 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.
    17. 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.
    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. 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.
    20. Oladosu, Gbadebo, 2022. "Bubbles in US gasoline prices: Assessing the role of hurricanes and anti–price gouging laws," Journal of Commodity Markets, Elsevier, vol. 27(C).
    21. Ghoddusi, Hamed, 2017. "Blending under uncertainty: Real options analysis of ethanol plants and biofuels mandates," Energy Economics, Elsevier, vol. 61(C), pages 110-120.
    22. Wood, Dallas & Larson, Justin & Jones, Jason & Galperin, Diana & Shelby, Michael & Gonzalez, Manuel, 2022. "World oil price impacts on country-specific fuel markets: Evidence of a muted global rebound effect," Energy Economics, Elsevier, vol. 111(C).
    23. Ghoddusi, Hamed & Roy, Mandira, 2017. "Supply elasticity matters for the rebound effect and its impact on policy comparisons," Energy Economics, Elsevier, vol. 67(C), pages 111-120.
    24. 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).

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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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