Downward, and downwardly revised.
Following up on this post several weeks ago, it seems that futures prices are confirming downward movements in gasoline prices. A simple bivariate regression using the lagged log futures price and log gasoline prices (all formulations) yields the following estimates:
(1) pgast = 0.514 + 0.719 × fgast-1 + ut
Adj-R2 = 0.97; SER = 0.034; DW = 1.90; smpl = 2005M11-2012M03; n = 77
Using this relationship, and the futures prices as of April 19, one can infer the path of future gasoline prices, and for May 13. I show the result in Figure 1:
Figure 1: Actual price of gasoline, all formulations, $/gallon (dark blue), and gasoline prices implied by futures as of 4/19 and equation (1) (red), and as of 5/13 (green). May observation is for 5/14 (blue triangle). NBER defined recession dates shaded gray. Source: ino.com, St. Louis Fed FRED, NBER, author’s calculations (see text).