Contents
Preface 6
Executive Summary 8
Gasoline and Crude Oil Price Relationships 10
Part 1: The relationship between gasoline prices and crude oil prices 10
Part 2: Global gasoline price relationships 14
Changing global gasoline price relationships 15
Changing U.S.gasoline supply patterns 17
Changing global gasoline trade flows 19
Gasoline-distillate market interactions 23
Appendix: Statistical Methodology for Relationships between Gasoline and Crude Oil Price 26
Econometric analysis 26
Results of the regression analysis 29
Dynamic linear modeling 37
Table 1. Percentage of weeks with lowest average weekly gasoline spot price 2000-10 20
Table 2. Percentage of weeks with lowest average weekly gasoline spot price 2011-14 20
Table 3. Dickey-Fuller test and autocorrelogram results 27
Table 4. Summary regression results for Equation Set 1 29
Table 5. Summary regression results for Equation Set 2 31
Table 6. Detailed regression results for Equation Set 1 33
Table 7. Detailed regression results for Equation Set 2 35
Figure 1. Weekly average Brent and WTI crude oil spot prices 11
Figure 2. Annual average retail gasoline to crude oil price spread 12
Figure 3. Global gasoline spot prices are highly correlated 15
Figure 4. New York Harbor gasoline spot price differentials to ARA and Singapore 16
Figure 5. U.S. Gulf Coast gasoline spot price differentials to NYH, ARA, and Singapore 17
Figure 6. Monthly refinery production of gasoline minus regional consumption 18
Figure 7. U.S. Gulf Coast monthly gasoline exports by destination 21
Figure 8. U.S. Gulf Coast monthly gasoline exports to Africa 22
Figure 9. U.S. Gulf Coast monthly gasoline exports to Asia and the Middle East 23
Figure 10. Weekly average 3-2-1 crack spreads versus Brent 24
Figure 11. U.S. Gulf Coast weekly average distillate and gasoline crack spreads versus Brent 25
Figure 12 (appendix). Brent model, crude oil coefficient 38
Figure 13 (appendix). WTI model, crude oil coefficient 39
Figure 14 (appendix). PADD 1B (NYH): Brent model, spread coefficient 39
Figure 15 (appendix). PADD 1B (NYH): WTI model, spread coefficient 40
Figure 16 (appendix). PADD 2: Chicago spot 41
Figure 17 (appendix). PADD 3: Gulf Coast spot 42
Figure 18 (appendix). PADD 5: Los Angeles spot 43