Petrol Retail Pricing

Petrol Retail Pricing

Petrol Retail Pricing

Introduction

Price is economically a pre-determined payment for certain services and even sometimes also described as the costs that must be transferred for the acquisition. Initially information rates about the fuel prices are a parameter that lets you specify the amount of revenue from sales and stimulating parameter to a specific action. Inform the buyer if prices decrease their financial resources if they make a purchase. Notify the seller if prices increase its revenue if it will sell. Then the redistributable secondary division rate is a tool that helps the distribution of goods and services and income shifting from one to the other social groups and the state budget. The state as well as the institution is made by means of redistribution of income prices.

Moreover the fuel prices are stimulus tool impact on suppliers and customers. The higher the level the higher fuel price is the profitability of production. This stimulates producers to increase production volumes because it pays off more produce. The lower level discourages producers and reduces production. The higher fuels price level also encourages manufacturers to bear the value in use of products such as quality, aesthetics and functionality in vehicles. The higher price level leads consumers to reduce consumption and lower stimulates the growth of consumption. With the stable fuel prices, the state can stimulate the growth of some articles of consumption. Understanding the retail fuel (petrol) market

Table: 1 (Descriptive Statistics)

Volume (Sales)

Prices

Avg Comp Price

Min Comp Price

Max Comp Price

Mean

3755.03

3.577

3.546

3.489

3.591

SE

23.50

0.010

0.010

0.010

0.010

Std Dev

979.5

0.22

0.419

0.417

0.420

Kurtosis

-0.89

-1.44

-1.416

-1.361

-1.441

Skewness

-0.12

0.247

0.271

0.305

0.252

Range

5024

1.140

1.368

1.380

1.380

The results of the descriptive statistics are showing that the average sales of petrol per day are 3755.03 gallons with a Standard deviation of 979.5 gallons more or less. The range of petrol sales in different days is certainly large which is showing huge deviations in the data. The range is 5024 gallons which is the difference between maximum and minimum liters of gallon. In the same way the average prices of the petrol for the US petrol retailer is $3.577 with a normal standard deviation of $0.22 more or less which is showing that the oil prices are almost moving towards the $3.5 mark. The prices are positively skewed i.e. they are moving more towards exceeding the $3.5 mark. The average petrol prices of the competitors is $3.546 which is not very deviating from the US petrol retailer but the standard deviations of average, minimum and maximum prices of petrol charging by the competitor is certainly high i.e. changing continuously in a greater ratio in comparison with the prices of the US petrol retailer. The range is also fairly deviating from the prices of the retailer as its of price changing is $1.14 and that of the competitor is $1.368 and even the minimum price change is $1.38 which is significantly larger than the prices of the retailer.

Fitting the price-response demand model and comparing different demand models

Table: 2 (Simple Regression)

Dependent Variable: VOL

Included observations: 1737

Variable

Coefficient

Std. Error

t-Statistic

Prob.  

C

4919.336

193.5565

25.41550

0.0000

PRICE

-9227.761

828.6844

-11.13543

0.0000

AVGCOMPRICE

8978.944

831.9038

10.79325

0.0000

R-squared

0.078735

    Mean dependent variance

3755.029

Adjusted R-squared

0.077672

    Durbin-Watson stat

0.548016

S.E. of ...