Asymmetries in US demand for gasoline

Abstract

Many studies have investigated the asymmetric responses of energy demand to changes in income and price. In estimating the US demand function for gasoline, we also consider consumer sentiment as a determining factor. In line with the income ratchet effect in consumption, our findings for 1991Q1-2015Q1 indicate that gasoline demand asymmetrically responds to deviation of income from its long-run trend. Similar asymmetric responses are found with respect to deviation of consumer sentiment from its long-run trend. In contrast, gasoline demand responds symmetrically to the deviation of price from its long-run trend and to the gap between actual and desired spending. Further results indicate that gasoline demand is price-inelastic, income-inelastic and inelastic with respect to consumer sentiment both in the short and long run.

Modelling U.S. gasoline demand: A structural time series analysis with asymmetric price responses

“…This gives a total of 71 observations where: Estimates. 9 If it is not possible to obtain statistically significant price coefficients and or they do conform to a priori economic intuition then restricted general versions would have been attempted (referred to as 'Restricted Asymmetry I', 'Restricted Asymmetry II', and 'Symmetry by Adeyemi and Hunt, 2014). However, this was not necessary here given a 'Full Asymmetry Model' was obtained.…”

Gasoline price predictability: insights from consumer vehicle‐buying assessments

“…Reliable predictions of energy and gasoline prices are important for projecting demand for gasoline‐ and energy‐using durable goods such as automobiles (Kahn, 1986; Busse et al., 2009; Allcott and Wozny, 2014). Such predictions are also important, among others, for deciding on energy‐related investment and investment in new energy production (Anderson, et al., 2011; Kellogg, 2014; Baghestani et al., 2016), and for designing such regulatory policies as automotive fuel standards and gasoline taxes in dealing with carbon emissions and climate change (Goldberg, 1998; Davis and Kilian, 2010; Alquist et al., 2013).…”