A key finding of this study is that consumer expectations respond to the volatility in retail gasoline prices. Historical price trends can be characterized as a series of rapid steps separated by varying periods of relative stability. The behaviorial models investigated here imply that consumer response to downward steps is constrained by the effect of the longer-term (less volatile) trends. The response to upward steps is, however, essentially unconstrained in that it can be driven directly through the short-term price trend. The rough trajectory by which retail gasoline prices have climbed historically thus appears to sustain relatively high consumer expectations for future price levels. In a second point of divergence, analytical efforts also generally employ real price trends. While arguably the basis for decision-making by business planners and analysts, it does not necessarily hold that consumers discount nominal price trends for expected inflation rates in developing their year-ahead price forecasts. An initial review of the SRC data for expected real price increases (expected prices adjusted for the expected inflation rate) identified no consistent relationships, and generally lower correlations, with historical trends in real prices.

  • Corporate Authors:

    Energy and Environmental Analysis, Incorporated

    1111 North 19th Street
    Arlington, VA  United States  22209
  • Publication Date: 1983-5

Media Info

  • Pagination: 30 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00393681
  • Record Type: Publication
  • Report/Paper Numbers: DOE/EI/11972-T1
  • Files: TRIS
  • Created Date: Jun 30 1985 12:00AM