Forecasting gasoline prices in the presence of Edgeworth Price Cycles

Calendar synchronization of gasoline price increases

“…Consumers benefit on net from the predictability that comes with calendar synchronization. The results agree with the conjecture made by Noel (2012) and Noel and Chu (2015) that calendar synchronization may benefit consumers by allowing them to more easily predict trough periods and purchase below the unweighted average price. It also agrees with the report of the ACCC (2007) that suggests many consumers attempt to do this.…”

“…I find elasticities to be very high, confirming that consumers are responsive to the cycle and in large numbers shift their purchases to known low price days. While several other articles have conjectured that consumers could do this (Noel, 2012;Noel & Chu, 2015), the results of this article show that consumers actually do this. A second implication of the results is that simple quantity-unweighted average prices-as is often calculated in the literature on retail gasoline price cycles and used in various price comparisons-tend to overstate the prices that consumers really pay when there are retail gasoline price cycles.…”

“…Troughs always occurred on Wednesdays and peaks always occurred on Thursdays during this period. Weekly synchronized cycles such as these have been observed in other major Australian cities as well (Noel & Chu, 2015;Valadkhani, 2013), along with Norway (Foros & Steen, 2013), the United States (Lewis, 2012) and Canada (Byrne, Leslie, & Ware, 2015;Noel, 2007a). More recently, daily-frequency price cycles synchronized to the hour of the day have been observed in Canada (Atkinson, Eckert, & West, 2014;Noel, 2015) and Germany (Haucap, Heimeshoff, & Siekmann, 2016;Siekmann, 2017).…”

“…Calendar synchronization turns out to be common in many countries that experience retail gasoline price cycles (Byrne & de Roos, 2015;Foros & Steen, 2013;Lewis, 2012;Noel, 2007b;Noel & Chu, 2015;Siekmann, 2017;Valadkhani, 2013). While it may seem surprising that little research has been done to evaluate it, a main roadblock has been the lack of availability of highfrequency gasoline volume data.…”

“…Foros and Steen (2013) examine cycles in Norway and conjecture that firms may be strategically coordinating relenting phases on specific days of the week to increase their profits. In contrast, Noel (2012) and Noel and Chu (2015) conjecture that calendar synchronization might be beneficial to consumers by making it easier for them to predict cycle troughs and buy at relatively low prices. In policy discussions, a sort of folk theory has developed in recent years that begins with the presumption that calendar synchronization is an undesirable feature of price cycles that is necessarily harmful to consumers.…”