Please note!

This fact brief was originally published as an experiment to test the concepts behind fact briefs.

Readers should be aware that while there is still a lot of useful information in fact briefs like this one, not all of them reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date, don't hesitate to contact us at support@gigafact.org.

FACT BRIEF

Do gasoline prices rise faster than they fall?

Thursday, March 24, 2022

By Jacob Alabab-Moser

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YES

Gasoline prices have been observed to be asymmetrical: they rise more quickly in response to increases in the price of crude than they fall in response to decreases in the price of crude.

On average, retail gasoline prices rise more than four times as fast as they fall, according to a working paper written for the Federal Trade Commission's Bureau of Economics.

Experts offer numerous explanations for this "rockets and feathers" phenomenon. One is that uncertainty about future oil prices causes retailers to refrain from immediately dropping prices. Another is that retailers use crude price decreases to recoup earlier losses from crude price increases.

Sometimes, however, there is no technical explanation. The Federal Reserve Bank of St. Louis cited economists that noted retailers will refrain from lowering prices to boost profits, taking advantage of consumers' acclimation to higher prices.

This fact brief is responsive to conversations such as this one.

Sources

Federal Trade Commission Asymmetric Pass-Through in U.S. Gasoline Prices

Penn State Rockets and feathers: Understanding asymmetric pricing

Marketplace Oil prices soared, then dropped. But gasoline is still expensive. Why?

KTLA (Los Angeles) Oil prices dropped, so why haven’t gas prices?

Federal Reserve Bank of St. Louis Why Gas and Oil Prices Don't Always Move in Sync

ABOUT THE CONTRIBUTOR

Gigafact

Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.

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Fact briefs are short, credibly sourced summaries that offer “yes/no” answers in response to claims found online. They rely on publicly available, often primary source data and documents. Fact briefs are created by contributors to Gigafact —a nonprofit project looking to expand participation in fact-checking and protect the democratic process. See all fact briefs here.