Idiosyncrasies in Australian petrol price behaviour: evidence of seasonalities

It has been argued that there are certain idiosyncrasies in Australian petr ol price behaviour. To the extent that these idiosyncrasies result in large magnitude differences in petrol prices, they may be exploited by consumers to significantly reduce their household expenditure on the product. Simila rly, such seasonalities may influence retailers in their purchase and stora ge decision. The objective of this paper is to test for seasonalities in th e Australian retail petrol market. The approach adopted is similar to that for determining calendar anomalies as documented in the financial and commo dity markets literature. We find that a monthly seasonal effect is pronounc ed with petrol prices lower in the months of February-May and highest in Ju ly and August. A day-of-the-week effect is also apparent and is manifest in all petrol prices for capital cities (Adelaide, Brisbane, Melbourne and Sy dney) across various years. However, the half-month effect, as is common in stock returns, is not observed. Moreover, contrary to popular belief that petrol prices are higher surrounding holidays, no evidence of the holiday e ffect is found. In Brisbane and Melbourne, petrol prices also have some rel ationship to the mood of consumers, as proxied using weather conditions. Th is is not observed in Adelaide and Sydney. (C) 2000 Elsevier Science Ltd. A ll rights reserved.