Statistical analysis
How oil prices reach the gas pump
We compared how crude oil price changes showed up in retail gasoline prices on the East Coast and in the Midwest.
The question
Do oil-price changes reach gasoline prices differently across regions? We compared the East Coast and Midwest using weekly data from January 2022 through March 2026.
What we did
- Prepared price series from EIA and FRED, then checked stationarity and evidence of cointegration.
- Estimated vector error correction models to study long-run relationships and short-run adjustment.
- Used structural VAR models and impulse responses to compare how price shocks moved through the two regions. The analysis files are written in R and Quarto.
Results & discussion
Our reported long-run elasticities were close to 0.68 in both regions. The East Coast showed stronger cointegration evidence, while the Midwest showed larger gasoline-specific shocks. Similar long-run estimates did not mean the regional dynamics were identical.
Limitations
The structural VAR uses an ordering assumption about which prices can respond within the same week. Results also depend on the sample period and model choices, so they should not be read as a current gasoline-price forecast.
Team: Ammy Lin, Farnoosh Memari, Tonantzin Real Rojas, and Isaac Vergara Mercenario. This repository is a fork of the collaborative project.
For the code and full project details, see the project repository.