Spatial spillovers in US wholesale gasoline markets

Oleg Kucher, J. Wesley Burnett, Donald Lacombe

Research output: Contribution to journalArticle

Abstract

This paper analyses how oil industry-related activities in neighbouring gasoline markets affect local markets. Our contribution consists of applying spatial econometric models to better understand pricing behaviour in US gasoline markets and the spatial phenomena unique to this particular industry. We find that neighbouring state-level gasoline price variation explains a large portion of the variation of in-state (or local) gasoline prices. Consistent with intuition, the empirical results imply that wholesale gasoline prices are positively affected by state and federal-level gasoline content regulations. Further, our results suggest that changes in state-level wholesale gasoline prices respond to both in-state and neighbouring-state inventory levels.

Original languageEnglish
Pages (from-to)687-710
Number of pages24
JournalPapers in Regional Science
Volume97
Issue number3
DOIs
StatePublished - Aug 2018

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Keywords

  • Gasoline markets
  • US gasoline policies
  • spatial spillovers

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