Environmental regulations and the increasing seasonality of gasoline prices

Abstract

We analyse gasoline prices over the past 27 years and find that there has been an increase in the seasonal variation since 2000. This finding is attributed to an increase in the environmental regulations on gasoline during the summer months.

Acknowledgement

The author would like to thank James Hamilton and Garett Jones for their helpful comments. Any remaining errors are the author's alone.

Notes

¹ We used the Johansen cointegration test to see if gasoline and oil were cointegrated. The results did not allow us to reject the null hypothesis of no cointegration, but since the p-value that there was no cointegrating relationship was 0.12, we followed the previous literature and used the ECM. We also looked at alternative methods, including OLS and regressing the markup on the months, which had similar results to those presented here.

² These data are available from the US Department of Transportation (http://www.bts.gov/).