Gas price difference -- More exercis

Does sam’s club really have a distinctive price difference between regular
(87) and premium (93)?
I called 5 Sam’s club in Houston area, I get:
(169.99(Regular 87), 189.99(Premium 93)) (169.99, 185.99) (174.99, 194.99)
(172.99, 189.99) (173.99, 193.99). The numbers are in cents. Comparing average
gas price in Houston area, ($1.748, $1.944), which has a difference of $0.196,
the difference of Sam’s club is just normal.
However, plotting weekly average price difference between regular and premium

Nice Job!!!
The problem you raised is different from which I gave. However, it’s very
I just had a brainstorming, might not be correct.
If the regular gas price was keeping rising, then the X axis can be
substituted by time. This will make things easier.
1). Before the $1.30 time point, the price rising was dominantely driven by
demand side, especially premium gas demand. During this time, the interest
rate is low, new car purchase increases, the price of all gases increases,
lots o

wow, pretty wild, applaud on your imagination!
since our interest is on the putative dependence of price difference on
average price, there is no need to keep track of the time. if one is more
comfortable working with time series data, he can just first sort the data. :slight_smile:

Would you plot average gas price vs. time (by month) for me? Thanks.
Suppose average gas price is correlated to time, it can be expressed as a
function of time. I need to know if my assumption is correct, please give it a
try or let me know the data source so I can do it by myself.
Yes, we can assume a dependence of price difference on average price.
Unfortunately, time may be a confounding effector of average gas price, only
after we take out this effect, we can make the assumption. So, please

Since the data spans less than 4 years, inflation should not be a problem. I
guess the importance of time lies in the events during this period.
Here plots the average price and price diff against time:
Note that 2003 March 19 is the date when US invades Iraq. And the is from

Again, Nice Job!!!
Don’t hate me because I’m very inquisitive. Would you add a reference line on
the first graph for $1.30 of the regular gas and get the time period when the
regular gas price is below $1.30? After you get the time, can you get the
interest rate and car sells during that time? In the meanwhile, I will think
again for the problems you raised. Thanks.

I became your RA le, hehe. I’ll make the reference line. And it is YOUR TURN
to get IR and car sale data :slight_smile:


Figure updated

Yeah, my previous assumption was wrong which obviously deviate my answer to a
wrong way. I also checked the interest rate and the car sales, and those seem
not to support my ideas either.
It took me a whole day to think it over. After eliminate a few possible
answers, I think this one might be the best of the possible ones. Please try
your best to attack the following answer.
Assumption or presumption: Monoply plays an important role in the gas pice and
the price is not totally decided by demand

Makes sense.
One minor thing, “monopoly” is not a right word. I think what you really mean
by monopoly is market power. And it is the inelasticity of demand for the gas
that gives the retailers the market power. And one thing you are wrong about
is, price is always determined by supply and demand. It is the peculiarity
(inelasticity within certain range) of demand that causes all the problem, or,
the interesting puzzle.
The revised version of your “assumption”: Inelasticity of demand, which cau