Asymmetric pricing of diesel at its source

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

Competitive diesel pricing can yield tangible benefits to truck drivers, fleet operators and farmers. The ability, and willingness, of wholesale distributors to asymmetrically pass on changes in diesel costs to consumers can adversely distort the market. Existing studies for Australia have focused on petrol (gasoil) prices, while there has been no testing for asymmetry in diesel prices. We test for rocket and feather effects in Australian wholesale diesel prices at their source. We find that in all seven seaport cities, when the price of oil goes up, diesel prices shoot up like a rocket and when the price of oil decreases, diesel prices fall like a feather. The asymmetric responses are more noticeable when oil prices are rising than falling. Results support the view that suppliers adopt or coordinate almost the same asymmetric pricing behaviour before distributing diesel among retailers.
Original languageEnglish
Pages (from-to)183 - 194
Number of pages12
JournalEnergy Economics
Volume52
Issue numberA
DOIs
Publication statusPublished - 2015

Cite this

@article{c882a5ad76734329b663fe0ce1e8bc30,
title = "Asymmetric pricing of diesel at its source",
abstract = "Competitive diesel pricing can yield tangible benefits to truck drivers, fleet operators and farmers. The ability, and willingness, of wholesale distributors to asymmetrically pass on changes in diesel costs to consumers can adversely distort the market. Existing studies for Australia have focused on petrol (gasoil) prices, while there has been no testing for asymmetry in diesel prices. We test for rocket and feather effects in Australian wholesale diesel prices at their source. We find that in all seven seaport cities, when the price of oil goes up, diesel prices shoot up like a rocket and when the price of oil decreases, diesel prices fall like a feather. The asymmetric responses are more noticeable when oil prices are rising than falling. Results support the view that suppliers adopt or coordinate almost the same asymmetric pricing behaviour before distributing diesel among retailers.",
author = "Abbas Valadkhani and Smyth, {Russell Leigh} and Farshid Vahid-Araghi",
year = "2015",
doi = "10.1016/j.eneco.2015.10.010",
language = "English",
volume = "52",
pages = "183 -- 194",
journal = "Energy Economics",
issn = "0140-9883",
publisher = "Elsevier",
number = "A",

}

Asymmetric pricing of diesel at its source. / Valadkhani, Abbas; Smyth, Russell Leigh; Vahid-Araghi, Farshid.

In: Energy Economics, Vol. 52, No. A, 2015, p. 183 - 194.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - Asymmetric pricing of diesel at its source

AU - Valadkhani, Abbas

AU - Smyth, Russell Leigh

AU - Vahid-Araghi, Farshid

PY - 2015

Y1 - 2015

N2 - Competitive diesel pricing can yield tangible benefits to truck drivers, fleet operators and farmers. The ability, and willingness, of wholesale distributors to asymmetrically pass on changes in diesel costs to consumers can adversely distort the market. Existing studies for Australia have focused on petrol (gasoil) prices, while there has been no testing for asymmetry in diesel prices. We test for rocket and feather effects in Australian wholesale diesel prices at their source. We find that in all seven seaport cities, when the price of oil goes up, diesel prices shoot up like a rocket and when the price of oil decreases, diesel prices fall like a feather. The asymmetric responses are more noticeable when oil prices are rising than falling. Results support the view that suppliers adopt or coordinate almost the same asymmetric pricing behaviour before distributing diesel among retailers.

AB - Competitive diesel pricing can yield tangible benefits to truck drivers, fleet operators and farmers. The ability, and willingness, of wholesale distributors to asymmetrically pass on changes in diesel costs to consumers can adversely distort the market. Existing studies for Australia have focused on petrol (gasoil) prices, while there has been no testing for asymmetry in diesel prices. We test for rocket and feather effects in Australian wholesale diesel prices at their source. We find that in all seven seaport cities, when the price of oil goes up, diesel prices shoot up like a rocket and when the price of oil decreases, diesel prices fall like a feather. The asymmetric responses are more noticeable when oil prices are rising than falling. Results support the view that suppliers adopt or coordinate almost the same asymmetric pricing behaviour before distributing diesel among retailers.

U2 - 10.1016/j.eneco.2015.10.010

DO - 10.1016/j.eneco.2015.10.010

M3 - Article

VL - 52

SP - 183

EP - 194

JO - Energy Economics

JF - Energy Economics

SN - 0140-9883

IS - A

ER -