Do retail petrol prices rise more rapidly than they fall in Australia’s capital cities?

Abbas Valadkhani, University of Wollongong

Article comments

Valadkhani, A, Do retail petrol prices rise more rapidly than they fall in Australia’s capital cities?, Working Paper 09-08, Department of Economics, University of Wollongong, 2009, 28p.

Abstract

This paper examines the long-run and short-run determinants of unleaded petrol prices in Australia’s capital cities using monthly data to test whether prices respond asymmetrically to external shocks. In the long-run petrol prices are mainly determined by the Tapis crude oil and Singapore petrol prices. There is some evidence of asymmetric price adjustments in the short-run since petrol price increases have been mostly passed on to the consumer faster than price decreases in four capital cities. One can thus argue that there are a significant degree of market inefficiency and/or collusion, requiring closer government price monitoring and scrutiny.