Understanding gasoline price dispersion

Abstract

This paper models and estimates the gasoline price dispersion across time and space by using a unique data set at the gas-station level within the U.S.. Nationwide e¤ects (measured by time …xed e¤ects or crude oil prices) explain up to about 51% of the gasoline price dispersion across stations. Re…nery-speci…c costs, which have been ignored in the literature due to using local data sets within the U.S., contribute up to another 33% to the price dispersion. While state taxes explain about 12% of the price dispersion, spatial factors such as local agglomeration externalities, land prices, distribution costs of gasoline explain up to about 4%. The contribution of brand-speci…c factors is relatively minor.JEL Classi…cation: L11, L81, R32, R41,

COVID-19 and Daily Oil Price Pass-Through

“…The motiva- tion behind this ordering comes from crude oil prices being determined globally, while gasoline spot and gasoline retail prices are determined within the U.S., as suggested in Borenstein et al (1997). Similarly, gasoline spot prices are determined nationwide in the U.S., whereas retail prices are determined based on several other factors, including refinery-related costs, local taxes, and local distribution costs (see D. Yilmazkuday & Yilmazkuday, 2016, 2019H. Yilmazkuday, 2017).…”

What Drives Petrol Price Dispersion across Australian Cities?

“…For instance, Haucap et al [22] found that station characteristics and cost shocks are the most critical factors that affect prices in Germany. Yilmazkuday [23] examined the price differences between stations in the USA using a dataset containing 38,245 price data points. They found that crude oil prices (51%), refinery-specific costs (33%), state taxes (12%), and spatial factors (i.e., land prices, 4%) had the most significant impact on the price disparity between states.…”

“…This result was in line with previous studies. For instance, Van Meerbeeck [5] and Yilmazkuday and Yilmazkuday [23] found a negative relation between station density and petrol prices. Moreover, Valadkhani and Babacan [29] found that the station density had a negative effect on the variations in the gross margin series in Australia.…”

Essays on Retail and Regional Economics

“…A prime example is Gas Buddy, which "crowdsources" reporting gas prices at the establishment level. This in turn allows for price dispersion investigations like (Yilmazkuday and Yilmazkuday, 2015). The presence of review and feedback websites reduce investment required to gain knowledge of product quality via discussion boards.…”