Anticipated and unanticipated effects of crude oil prices and gasoline inventory changes on gasoline prices

Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

“…Conversely, an unanticipated rise in demand causes prices to increase sharply because finite inventories and lags in production constrain the short-run supply response. However, Radchenko and Shapiro [16] disagreed with Kaufmann and Laskowski [11]. They argued that gasoline price adjustments are faster and stronger for anticipated changes in international crude oil prices and inventory levels than for unanticipated changes, and this difference is statistically significant.…”

“…This result is common sense given that the most probable source of the inventory shock is actually the demand shock. Furthermore, Radchenko and Shapiro [16] pointed out that the changes in gasoline inventories have a significantly asymmetric effect on gasoline prices and that gasoline inventories have a feedback effect on oil prices. Especially, an increase in gasoline inventories leads to a significant decrease in oil prices.…”

“…He found that both approaches support the presence of asymmetries in the adjustment of retail prices. Radchenko and Shapiro [16] pointed out that those gasoline price adjustments were faster and stronger by a statistically significant margin for anticipated changes in oil prices and inventory levels than for unanticipated changes. For Europe, Grasso and Manera [17] used three different models including asymmetric error-correction model (ECM), autoregressive threshold ECM and ECM with threshold co-integration, and tested the asymmetry with monthly data of gasoline prices from France, Germany, Italy, Spain and UK over the period [1985][1986][1987][1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003].…”

Nonlinear joint dynamics between prices of crude oil and refined products

“…Using a hidden cointegration technique, Honarvar [6] finds the evidence of asymmetric response and the major reason is technological changes on the demand side, rather than crude oil price movements on the supply side. Radchenko and Shapiro [7] study the effect of anticipated and unanticipated changes in oil prices and gasoline inventory on gasoline prices. Their findings show that gasoline adjustments are more quicker and stronger for anticipated changes in oil prices and gasoline inventory than for unanticipated changes.…”

Price Adjustment in Taiwan Retail Gasoline Market

“…Whether in Taiwan or abroad, public opinion is generally of the mind that an increase in oil prices leads directly to an increase in gasoline prices, while reduction in oil prices correspond to a slower decline in the prices of gasoline. (Note 1) Price fluctuations in the gasoline market described above represent price asymmetry, which has long been a topic of significance to both economists and the general public (see, for example, Manning, 1991;Borenstein, Cameron, & Gilbert, 1997;Eltony, 1998;Reilly & Witt, 1998;Godby, Lintner, & Wandschneider, 2000;Bachmeier & Griffin, 2003;Radchenko, 2005;Radchenko & Shapiro, 2011). Figure 1 shows the price of crude oil (per barrel) in NTD.…”