Gasoline Prices on the Rise Term Paper

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3.2. The chart

At this level of the research endeavor, emphasis would be placed on the secondary sources of information. These reveal the benefit of presenting the reader and the researcher with vast information on the historic evolution of the gas prices. The most reputable source in this sense is represented by the Energy Information Administration, which has recently issued a report on the energy outlook. According to the researchers and editors at EIA, the five-year evolution of the gasoline prices in the United States is represented as follows:

Massive price increases in 2007 and the first half of 2008

Dramatic price decrease in the second half of 2008

Slow, but steady increase starting with 2009 and continuing through 2012

The growth in prices commenced in 2009 and expected to continue through 2012 would not lead to the same high gasoline prices as registered in the first half of 2008. The chart below reveals this evolution and projection:

3.3. The P-value analysis

At this level of the analysis, the evolution of the gasoline prices would be assessed with the help of the P-value analysis. The P-value analysis is an analysis which evaluates the statistical importance of a phenomenon and the probability for the phenomenon to materialize (University of the West of England).

The hypothesis at this stage is that within the following six months, at least four months would witness an additional increase in prices. In order to test this hypothesis, the p-value is computed as shown in the formula in the capture below:

This low p-value indicates that the hypothesis issued is extremely likely to materialize as the phenomenon on of price increases is statistically relevant.

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The finding is also supported by the researchers at the Energy Information Administration, who expect the price of the barrel of crude oil to increase with an estimated $14 comparative to 2010. In both 2011 and 2012, the experts expect an increase in the gasoline prices within the United States.

3.4. The study limitations

A first limitation of the current study is that it applies the statistical method only to the four gasoline categories and at the general level of the United States. In other words, it does not consider the state, or region, specific differences in gasoline prices. Nevertheless, this limitation is acceptable and not perceived to impact the overall study findings due to the fact that the gasoline price trends are similar across the country. Also, the application of the statistical model to the individual figures of each category in each U.S. region would exponentially increase the complexity of the study.

Another limitation is represented by the fact that the statistical model and the computer output are applied only to the gasoline prices in January and February 2011, without considering the long-term and historic evolution of the prices. In this sense then, the historic evolution of prices is assessed as it presented in secondary sources. The limitation is however also accepted because of the fact that it does not impact the study findings, but it also increases the computation complexities. In other words, more compound statistical models are applied in better controlled environments, in which the variables are carefully assessed......

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