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Bubbles in US gasoline prices: Assessing the role of hurricanes and anti–price gouging laws

Gbadebo Oladosu

Journal of Commodity Markets, 2022, vol. 27, issue C

Abstract: This paper examines the presence of bubbles — price changes that cannot be attributed to market fundamentals — in weekly US retail gasoline prices for ten US cities, and whether these bubbles are affected by hurricane events and anti–price gouging laws. Rolling-window, right-tailed unit root tests were used to identify and date bubbles. The analysis found 6 to 22 bubbles, lasting 4 weeks or longer, in city-level retail gasoline prices between 2000 and 2017. A linear regression model of the adjustment speed coefficients from the bubble identification step found that hurricane events increase the rate of price explosivity (or slow the rate of return to equilibrium) following a shock. The regression estimates also imply that state anti–price gouging laws can counteract these effects.

Keywords: Gasoline prices; Price bubbles; Adjustment speed; Hurricanes; Price gouging (search for similar items in EconPapers)
JEL-codes: C51 D18 Q41 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:27:y:2022:i:c:s2405851321000520

DOI: 10.1016/j.jcomm.2021.100219

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