IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Daily Price Cycles and Constant Margins: Recent Events in Canadian Gasoline Retailing

Retail gasoline pricing in Canada has typically followed certain distinct patterns, ranging from long durations of price rigidity relative to wholesale prices to daily price cycles. This paper examines recent changes to pricing patterns in Canadian cities resulting in new equilibrium behavior, and discusses possible reasons for these changes. Using high frequency retail price data obtained from GasBuddy.com, it is demonstrated that volatility changes exhibited in Toronto appear to correspond to an increased frequency of the price cycle, and replacement of the cycle with fixed retail margins. While multiple factors may have contributed to the first pricing change, the second change corresponds closely to a refinery fire in southern Ontario; this temporary event (in conjunction with a rail strike and refinery maintenance) could have triggered a permanent change in equilibrium behavior. This paper also illustrates problems for academic researchers and policymakers when using low frequency price data to analyze pricing in a market characterized by a price cycle. Keywords: Price cycle, Gasoline retailing, Constant margins, Supply shocks

Download Executive Summary Purchase ( $25 )

JEL Codes: L71: Mining, Extraction, and Refining: Hydrocarbon Fuels, Q41: Energy: Demand and Supply; Prices, D40: Market Structure, Pricing, and Design: General, D47: Market Design, Q42: Alternative Energy Sources, L11: Production, Pricing, and Market Structure; Size Distribution of Firms

DOI: 10.5547/01956574.35.3.3

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 35, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


© 2023 International Association for Energy Economics | Privacy Policy | Return Policy