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King University Releases New Statistical Model for Predicting U.S. Monthly Average Gasoline Prices

June 23, 2022

BRISTOL, Tenn., June 23, 2022 — Following a two-and-a-half-year study that examines relationships among prices for crude oil and the wholesale and retail (or pump) prices for gasoline, the newest report from the King Institute for Regional Economic Studies (KIRES) provides a way to forecast monthly average prices of regular gasoline in the United States.

Entitled “A Statistical Model to Predict U.S. Monthly Average Gasoline Prices,” the report was prepared by Alexander P. Brumlik, Ph.D., co-director of KIRES and associate professor of Economics, and Sam Evans, Ph.D., former co-director of KIRES and associate professor of Finance and Economics, now retired.

“Gasoline is unique among the products produced and consumed in the U.S.,” Brumlik said. “No other commodity catches our attention when it suddenly becomes more expensive, and more expensive it has certainly become.”

Brumlik noted that from January 2020 through May 2022, the U.S. monthly average pump price for regular gasoline rose from $2.20 per gallon to $4.44 per gallon, including a 33-cent-per-gallon increase from April to May 2022.

“In this study, our primary objective was to develop a statistical model to predict U.S. monthly average prices of regular gasoline, based on changes in crude oil costs and wholesale gasoline prices,” Evans said. “We also analyzed changes in the retail margin, which is the difference between the wholesale and retail prices of gasoline. The study was conducted over a 29-month period that saw extreme fluctuation in oil and gas markets, brought about by the global COVID-19 pandemic and, more recently, Russia’s invasion of Ukraine.”

The study’s model involved estimating the relationship between the U.S. monthly wholesale cost and the monthly average refiner acquisition cost of crude oil, and then evaluating the relationship between the retail and wholesale prices of gasoline. The study’s authors expected an increase in retail prices whenever wholesale prices increased, but also found that the relationship was not that simple:

  • For every $1 per barrel increase in the cost of crude oil, the wholesale price tended to rise by 3.1 cents per gallon
  • However, for each $1 decrease in the cost of crude oil, the average retail price decreased less than 3 cents per gallon
  • Because of this and other factors, changes in the monthly average retail price depend not only on the actual wholesale price of gasoline, but on whether the wholesale price increased or decreased
  • Overall, the wholesale price of gasoline accounted for 73% of the fluctuation in retail price

“We found that the equation developed by the KIRES team explained 97% of the month-to-month variation in average wholesale gasoline prices over the 29-month period,” Brumlik said.

The KIRES Report No. 23, “A Statistical Model to Predict U.S. Monthly Average Gasoline Prices,” can be found here. For more information about King, visit