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Consumer Price Index

Measuring Price Change in the CPI: Motor fuel

The motor fuel index, a component of the private transportation index, is included in the transportation group of the Consumer Price Index (CPI). The motor fuel index is published monthly at the U.S., regional, and area level. In addition, an average price per gallon is published monthly for gasoline (all types), regular unleaded, midgrade unleaded, premium unleaded, and diesel at the U.S. and regional level, and for select areas.

Item definition

The gasoline (all types) index, which has the majority of the weight of the motor fuel index, is composed of three grades of gasoline:

  • Regular unleaded gasoline: Gasoline having an octane rating greater than or equal to 85 and less than 88.
  • Midgrade unleaded gasoline: Gasoline having an octane rating greater than or equal to 88 and less than or equal to 90.
  • Premium unleaded gasoline: Gasoline having an octane rating greater than 90.

The gasoline (all types) index and the special relative series for each type of gasoline and average prices all use a secondary source rather than survey data collected by the Bureau of Labor Statistics (BLS).

The other motor fuels index is composed of automotive diesel fuel and alternative motor fuels such as Ethanol (E85/flex fuel and E15), biodiesel, natural gas, and electricity that is sold for use in consumer automobiles.

Relative Importance

The relative importance of an item category is its percent of the CPI weight as of December of the most recent year.

 Table A. Relative importance, December 2020
Item Relative importance

Transportation

15.161

Public transportation

1.105

Private transportation

14.056

Motor fuel

2.785

Gasoline (all types)

2.811

Other motor fuels

0.064

Sample selection

Gasoline (all types)

For the gasoline (all types) index, all observations from the secondary source dataset that are within the CPI geography are eligible and used for index relative calculation. The zip code and state of each outlet is provided, which are mapped to the CPI geography. Though this source provides millions more observations than the traditionally collected data per month, it is not considered a census of all gasoline price observations. Observations are limited to those self-reported by users of the secondary source.

The dataset for gasoline (all types) includes the daily average price per gallon observed for a given fuel type at each outlet. Besides the daily average price, each observation includes the fuel type being priced, station ID number, zip code, state, and the number of valid reports that were used to create the daily average price. The monthly gasoline indexes are calculated from the daily datasets received from the secondary source.

Other motor fuels

Unlike most other items in the CPI where individual item categories are sampled, other motor fuels categories are automatically selected at every sampled motor fuel retailer in the current survey. Prices are collected daily as a per-gallon pricing unit, and include excise and sales taxes.

CPI data collectors must first determine the type of other motor fuel priced by observing the other motor fuel pump at the outlet. Additional information on the sampling process is available in the Design chapter of the CPI section of the Handbook of Methods. The following are characteristics that would be identified:

  • Type of service: self-service, minimum-service, full-service and unmanned
  • Payment type: cash, credit card, and debit card, etc.
  • Brand name: specific name of gasoline company
  • Pricing unit: usually per gallon
  • Octane rating
  • Type of alternative motor fuel

Price Change

Gasoline (all types)

The gasoline (all types) data are reviewed and outliers are removed before index relative and average price calculation.

Missing prices for stations in the sample are imputed using the cell-relative imputation method. There is no item replacement. Information on the cell-relative imputation method is available in the Calculation chapter of the CPI section of the Handbook of Methods.

Other motor fuels

All price information for other motor fuels in the CPI is collected by CPI data collectors, and evaluated for index use by CPI analysts in the Washington Office.

For other motor fuels, the CPI returns every month to the sampled outlets to obtain the current prices of the selected items, including any changes or discounts. Any characteristics of the selected items that have changed are identified and reviewed. When the price of an item changes, the CPI analyst tries to determine a reason for the change; however, if the characteristics remain unchanged, the CPI usually reflects the price change without any adjustments.

Because prices for other motor fuels are usually available, there are few item replacements caused by item availability. Nevertheless, if a replacement is needed and it is essentially the same as the predecessor item, the CPI treats any price difference between the replacement item and its predecessor as pure price change.

Index Methodology

For the gasoline (all types) index, monthly Primary Sampling Unit (PSU) relatives are constructed by comparing fuel type/outlet ID relatives in the current month to the previous month and averaging across outlets within each county using the Jevons (an unweighted geometric mean) price index formula. An item-area index is then calculated using the weighted geometric mean of counties within a given area. The price relatives are then used to update the basic item index and those item-area indexes are aggregated across items and areas using a modified Laspeyres formula. Information on the geometric mean price index and Laspeyres formulas are available in the Calculation chapter of the CPI section of the Handbook of Methods.

For the other motor fuels index, monthly Primary Sampling Unit (PSU) relatives are constructed by comparing fuel type/outlet ID relatives in the current month to the previous month and averaging across outlets using the geometric mean price index formula. An item-area price relative is calculated using the weighted geometric mean of all price changes, where the weight is an estimate of base-period expenditures. Those price relatives are used to calculate each basic item-area index, and those item-area indexes are aggregated across items and areas using a Laspeyres formula.

Data

Access data for motor fuel in our online database.

Additional information

Although the CPI for motor fuel is reported monthly, there are numerous government agencies and independent associations that report motor fuel data using different time periods. Sampling techniques and methodologies differ for the various groups reporting data.

Three of the more well-known agencies reporting motor gasoline prices are:

  • Energy Information Administration (EIA): A division of the Department of Energy that publishes retail gasoline prices weekly for all three grades of gasoline from a sample of approximately 800 retail gasoline outlets. The prices collected represent self-service except in areas having only full service.
  • American Automobile Association (AAA): A member organization which publishes updated retail gasoline price data daily. Price data are derived from credit card transactions at over 60,000 gasoline stations throughout the country.
  • Lundberg Survey: An independent market research company offering local and national coverage of fuel prices and fuel taxes. Retail prices of gasoline and diesel fuel are gathered twice-monthly in 68 markets, covering all states and Washington, D.C., or on special request in other areas and frequencies.

Although these other sources may appear to show different fuel price movements from the CPI, the apparent differences are due to timing. For example, the EIA data are released each week and correspond to prices on a particular day. The CPI motor fuel index corresponds to average prices over a calendar month. BLS research has consistently shown that when timing differences are taken into account, the CPI and EIA are extremely similar in their price movements. This research is detailed in the Measures of gasoline price change article 

Additional information may be obtained from the Consumer Price Index Information Office by email or calling 202-691-7000. Information on the CPI's overall methodology can be found in the BLS Handbook of Methods.

Last Modified Date: July 13, 2021