| The objectives of this study were to analyze the short-run impact of futures contract prices on crude oil prices, the impact of crude oil prices on gasoline prices for consumers, and the effect of monetary policy interventions on the stability of the real price of oil for 2000-2008. In this study I used three sets of multivariate VEC models to estimate these relationships. My results show that, after accounting for supply and demand conditions, crude oil prices increased with the introduction of futures contracts on oil. The results also showed the magnitude of the effect of changes in the price of crude oil on gasoline prices. Lastly, my results showed that monetary policy interventions of raising the federal fund interest rate did not alleviated some of the upward pressure of the real price of crude oil. |
