A Review of the Evidence on the Relation Between Crude Oil Prices and Petroleum Product Prices

47 Pages Posted: 10 Oct 2018

See all articles by Louis H. Ederington

Louis H. Ederington

University of Oklahoma - Division of Finance

Chitru S. Fernando

University of Oklahoma - Michael F. Price College of Business

Seth A. Hoelscher

Missouri State University - College of Business

Thomas K Lee

Energy Information Administration - US DOE

Scott C. Linn

University of Oklahoma - Michael F. Price College of Business

Date Written: September 12, 2018

Abstract

We review a large body of the empirical literature focusing on the relation between petroleum product prices and oil prices and discuss the evidence on the direction of causality between crude oil prices and petroleum product prices. In addition, we survey the literature on the much-debated question of whether petroleum product prices respond differently to increases versus decreases in oil prices, which Bacon (1991) labeled the “rockets and feathers” phenomenon.

Keywords: Oil Prices, Petroleum Product Prices, Energy Economics, Commodities

JEL Classification: G13, Q40, Q41, Q47

Suggested Citation

Ederington, Louis H. and Fernando, Chitru S. and Hoelscher, Seth and Lee, Thomas K. and Linn, Scott C., A Review of the Evidence on the Relation Between Crude Oil Prices and Petroleum Product Prices (September 12, 2018). Available at SSRN: https://ssrn.com/abstract=3249045 or http://dx.doi.org/10.2139/ssrn.3249045

Louis H. Ederington

University of Oklahoma - Division of Finance ( email )

Norman, OK 73019
United States
405-325-5591 (Phone)
405-325-7688 (Fax)

Chitru S. Fernando

University of Oklahoma - Michael F. Price College of Business ( email )

Adams Hall
307 West Brooks Street
Norman, OK 73019-4004
United States
405-325-2906 (Phone)
405-325-7688 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/F/Chitru.Fernando-1/

Seth Hoelscher

Missouri State University - College of Business ( email )

United States

Thomas K. Lee

Energy Information Administration - US DOE ( email )

1000 Independence Avenue, SW
Washington, DC 20585
United States

Scott C. Linn (Contact Author)

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States
405-325-3444 (Phone)
405-325-1957 (Fax)

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