This paper examines the long-run and short-run determinants of unleaded petrol price in Australia's capital cities using monthly data to find out whether prices respond asymmetrically to external shocks. Based on the cointegration test results and the estimated asymmetric short-run dynamic models, it is found that: (1) in the long-run petrol prices are mainly determined by Tapis crude oil and Singapore petrol prices; (2) 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. More specifically, this paper provides convincing evidence in support of asymmetric price adjustments and the "rockets-and-feathers hypothesis" in Adelaide, Brisbane, Melbourne and Sydney. One can thus argue that there are a significant degree of market inefficiency and/or collusion, requiring a closer government price monitoring and scrutiny.

This paper examines whether or not unleaded petrol prices (at Australia's 18 wholesale distribution terminals) respond asymmetrically to changes in the exchange rate and the Singapore petrol prices (known as MOPS95). It is found that the exchange rate is the most significant source of asymmetric behaviour in 10 terminals. In other words, following a depreciation of $A, prices significantly rise more than when the exchange rate appreciates. The results indicate that terminal gate prices do not respond asymmetrically to changes in MOPS95 with the only 3 exceptions being Cairns, Devonport and Perth. There are also 8 terminals in which prices are significantly stickier downwards than upwards, suggesting that price increases are passed onto retailers faster than price decreases.

This paper examines if the long-run relationship between retail and wholesale petrol prices is subject to adjustment asymmetric behaviour using weekly Australian data (2007-2012) across 111 locations. A short-run dynamic model is specified in which three feedback coefficients capture three different types of disequilibria: large and positive; large and negative; small positive/negative. Significant evidence of asymmetric behaviour is found in 28 locations, which are mainly in Tasmania, Queensland and New South Wales. In these locations when prices are conspicuously above the equilibrium path, retailers sluggishly lower their prices but when prices are substantially below the equilibrium values, the adjustment speed is significantly faster.

Fuel prices play a crucial role in the supply side of many economies across the globe. Hence, it is important to ensure that fuel pricing is efficient and free from any asymmetric behaviour. This paper examines the long- and short-run relationships between the price of unleaded petrol in Singapore (Mogas95) and the price of Tapis crude oil using 4,929 daily observations (4 June 1993-25 April 2012). As expected, we found that these two key energy indicators are cointegrated. We then developed a modelling framework that allowed us to test for adjustment asymmetries that distinguish between the size and sign of disequilibria, proxied by three different error correction terms. We found no significant evidence of any asymmetric pricing behaviour and market inefficiency. However, our results revealed a significant weekly cyclical pattern, with petrol being more expensive on Thursdays/Fridays than the rest of the week.

Rising fuel prices can hamper economic activities in urban and regional areas. Despite following a mean reverting pattern over time, the spread between retail and wholesale prices of petrol exhibits significant differences across various geographical locations in Australia. Using a hierarchical cluster analysis, this paper classifies 109 retail locations into six heterogeneous groups with homogeneous contents. By identifying the whereabouts of those petrol stations that set relatively high gross profit margins within each comparable cluster, this study can provide important policy implications for both consumers and regulators. Contrary to popular belief, we found that excessively high margins are not necessarily observed only in remote and rural areas.

This study addresses a very significant policy issue not previously examined at a disaggregated level for Australia by identifying on which day(s) petrol is more expensive and in which locations discount days are non-existent. After conducting a time series analysis of the day of the week effect in retail prices of unleaded petrol in 114 locations across Australia (Jan 2005 to Apr 2012), it is observed that prices mostly peak on Thursday/Friday and then decline until they hit their cyclical trough mainly on Sunday/Tuesday. However, these daily differences are only statistically significant in capital cities or large regional centres. A cross-sectional analysis of the mean prices during the period Nov 2007 to Feb 2012 shows that (a) in remote and less populous locations, where sales are presumably limited and overhead costs are high, petrol is more expensive; (b) petrol generally costs more in places which exhibit less price variability. The disaggregated and location-specific results can increase our understanding of Australia's retail petrol market and can be beneficial to motorists as well as various government and non-government organisations such as the ACCC (Australian Competition and Consumer Commission), AAA (Australian Automobile Association) and FuelWatch.