Price Changes in the Gasoline Market: Are Midwestern Gasoline Prices Downward211 Sticky

摘要

The report concentrates on regional gasoline prices in the Midwest from October211u001e1992 through June 1998, and reaches the following conclusions: Wholesale and 211u001eretail gasoline price changes in the Midwest during this period are basically 211u001esymmetric with respect to changes in crude oil prices; Retail gasoline prices in 211u001ethe Midwest often rise faster than they fall in response to wholesale gasoline 211u001eprice changes, so the report detected pattern asymmetry. However, after all 211u001elagged price adjustments have been completed, wholesale price changes will almost 211u001ecompletely pass through to the retail level, so there is little evidence of 211u001eamount asymmetry; The adjustment times between different levels of the gasoline 211u001emarket make it possible for the detection of pattern asymmetry to be only a 211u001estatistical artifact. The report shows how, because of time lags in the gasoline 211u001edistribution system, retail prices may continue to rise even after wholesale 211u001eprices have begun falling, giving the appearance of pattern price asymmetry. 211u001eHowever, when allowance is made for the lagged adjustment times, the perceived 211u001epattern asymmetry largely disappears and the conclusions of this report depend 211u001eimportantly on various characteristics of the data used, including frequency and 211u001elocation specificity. Thus, conclusions about price asymmetry at the city or 211u001estate level would necessitate a collection of data and an examination of numerous 211u001elocal gasoline markets.