Inventories and Wholesale Gasoline Price Dynamics

26 Pages Posted: 15 Jul 2009

See all articles by Gerard H. Kuper

Gerard H. Kuper

University of Groningen - Faculty of Economics and Business

Date Written: October 30, 2008

Abstract

This paper sheds new light on the asymmetric short-run dynamics of US gasoline prices. The odel is inspired by Pindyck’s inventory model of commodity price dynamics, that stresses the importance of volatility in crude oil markets for short-run market dynamics. We show that after February 1999 asymmetry in gasoline price dynamics is caused by changes in the net marginal convenience yield: higher costs of marketing and storage lead to rising gasoline prices, whereas a drop in these costs hardly affects gasoline prices.

Keywords: Asymmetry, Gasoline prices, Inventories, Volatility

JEL Classification: C22, D43, E31, L11, Q40

Suggested Citation

Kuper, Gerard H., Inventories and Wholesale Gasoline Price Dynamics (October 30, 2008). Available at SSRN: https://ssrn.com/abstract=1434106 or http://dx.doi.org/10.2139/ssrn.1434106

Gerard H. Kuper (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

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