Do gasoline prices respond to non-US and US oil supply shocks?. Issue 56 (2nd December 2021)

• Record Type: Journal Article
• Authors: Kang, Wensheng; Perez de Gracia, Fernando; Ratti, Ronald A.
• Is Part Of: Applied economics. Volume 53:Issue 56(2021)
• Page Start: 6488
• Page End: 6496
• Publication Date: 2021-12-02
• Subjects: Gasoline prices -- oil prices -- Non-US and US oil supply shocks -- structural vector autoregressive model; E44 -- G12 -- Q43; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2021.1946473
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: This paper extends previous literature that investigates the impact of crude oil prices on US gasoline prices using a structural vector autoregressive model of the global crude oil market. In particular, we disentangle the global oil production into non-US and US oil production and we examine whether real gasoline prices respond to non-US and US oil supply shocks using monthly data from October 1973 to February 2018. It shows that non-US (US) oil supply disruptions generate nonsignificant (significantly positive) effects on the real price of oil and real price of gasoline. The effect of non-US (US) oil supply shocks on the real price of gasoline has been declining (rising) over time.