A Comprehensive Analysis of Determinants of the US National Retail Price of Gasoline Open Access

Liu, Hongbo (2013)

Permanent URL: https://etd.library.emory.edu/concern/etds/vx021f69s?locale=en


This investigation examines the multiple factors that lead to the pricing of the national average price of regular gasoline in the United States through a three dimensional analysis focusing on pricing, supply, and technology. In addition to time series analysis on trend and seasonality, three models corresponding to factors relating spot prices, quantities of various raw and refined petroleum products and refining technology are constructed to determine how individual factors impact the pricing of retail regular grade motor gasoline in the United States. Using weekly data from 1995 to 2010 published by the Energy Information Administration, ordinary least squares (OLS) regressions are conducted and the strengths of the constructed models are evaluated. Results indicate that the regular gasoline retail price is impacted by the WTI Index price, the New York Harbor Conventional gasoline spot price, the retail price of premium gasoline, the US domestic production of crude oil, the US Stocks of gasoline, the total products supplied for all petroleum products, the gross input into refineries, the refinery operable capacity, and the percent utilization of the refinery operable capacity. Additionally, it was determined that seasonality did not have a significant impact on retail gasoline pricing but the price itself for any week is strongly influenced by the price of the immediately preceding week.

Table of Contents


I. Introduction - 1

II. Literature Review - 4

III. Data Description - 8

IV. Empirical Methods - 12 V. Results and Discussion - 16 VI. Conclusion - 24 VII. References - 26 VIII. Appendix - 28

List of Figures:

Figure 1: WTI Crude Prices January 1995 - December 2010 - 2

Figure 2: Price of Retail Gasoline in the US, January 1995 - December 2010 - 8

Figure 3: Partial Autocorrelation of residuals of model 1 - 19

Figure 4: Partial Autocorrelation of residuals of model 2 - 21

Figure 5: Partial Autocorrelation of residuals of model 3 - 22

List of Tables

Table 1: Summary of Variables - 28

Table 2: Summary of Regression Results - 31

Table 3: Summary of Seasonality Regression - 31

Table 4: Regression 1a, Spot Prices - 33

Table 5: Regression 1b, Spot Prices (insignificant variables dropped) - 33

Table 6: Regression 2a, Quantity - 34

Table 7: Regression 2b, Quantity (insignificant variables dropped) - 35

Table 8: Regression 3a, Technology - 36

Table 9: Regression 3b, Technology (insignificant variables dropped) - 36

Table 10: Regression 4, Time Trend Analysis - 36

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