University of California

Los Angeles

Statistical Analysis of Gasoline and Diesel Loss

Rates at Retailers

A dissertation submitted in partial satisfaction

of the requirements for the degree
Master of Science in Statistics

by

Xiaofei Yan

2008

c Copyright by

Xiaofei Yan
2008

The dissertation of Xiaofei Yan is approved.

PAIK SCHOENBERG, FREDERIC R.

XU, HONGQUAN

DE LEEUW, JAN , Committee Chair

University of California, Los Angeles

2008

ii

To my mother Fei Chen and my father Xingbo Yan. . .

whohave given me all this unconditional support and love all the time

iii

Table of Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1

Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2

Time Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2.1

Yearly Data . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2.2

Quarterly Data . . . . . . . . . . . . . . . . . . . . . . . .

2.2.3

Monthly Data . . . . . . . . . . . . . . . . . . . . . . . . .

Site Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 Methodology and Results . . . . . . . . . . . . . . . . . . . . . . .

10

2.3

3.1

3.2

Fuel Loss Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

3.1.1

Gasoline and Diesel . . . . . . . . . . . . . . . . . . . . . .

10

3.1.2

By Region . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

3.1.3

By Years . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

3.1.4

By Quarter . . . . . . . . . . . . . . . . . . . . . . . . . .

17

3.1.5

By Month . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

3.1.6

By Sitecode . . . . . . . . . . . . . . . . . . . . . . . . . .

22

2 Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25

3.2.1

Gasoline and Diesel . . . . . . . . . . . . . . . . . . . . . .

25

3.2.2

Regional Results . . . . . . . . . . . . . . . . . . . . . . .

26

3.2.3

Yearly Results . . . . . . . . . . . . . . . . . . . . . . . . .

27

iv

3.2.4

Quarterly Results . . . . . . . . . . . . . . . . . . . . . . .

27

3.2.5

Monthly Results . . . . . . . . . . . . . . . . . . . . . . .

28

3.2.6

Sitecode Results . . . . . . . . . . . . . . . . . . . . . . . .

28

Multiple Comparisons . . . . . . . . . . . . . . . . . . . . . . . .

29

3.3.1

By Region . . . . . . . . . . . . . . . . . . . . . . . . . . .

29

3.3.2

By Year . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30

3.3.3

By Quarter . . . . . . . . . . . . . . . . . . . . . . . . . .

30

3.3.4

By Month . . . . . . . . . . . . . . . . . . . . . . . . . . .

31

3.3.5

By Sitecode . . . . . . . . . . . . . . . . . . . . . . . . . .

32

Time Series Analysis on Gasoline Loss Rate . . . . . . . . . . . .

32

3.4.1

AR(1) Model . . . . . . . . . . . . . . . . . . . . . . . . .

38

3.4.2

AR(1) Regression on Months . . . . . . . . . . . . . . . .

38

3.4.3

AR(1) Regression on Years . . . . . . . . . . . . . . . . . .

41

4 Conclusions and Discussions . . . . . . . . . . . . . . . . . . . . . .

47

3.3

3.4

4.1

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47

4.2

Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51

List of Figures
2.1

Data by Regions . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2

Data Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.3

Gasoline Data by Site Codes . . . . . . . . . . . . . . . . . . . . .

2.4

Diesel Data by Site Codes . . . . . . . . . . . . . . . . . . . . . .

3.1

Gasoline and Diesel Losses . . . . . . . . . . . . . . . . . . . . . .

12

3.2

Regional Gasoline Losses . . . . . . . . . . . . . . . . . . . . . . .

13

3.3

Regional Diesel Losses . . . . . . . . . . . . . . . . . . . . . . . .

14

3.4

Yearly Gasoline Losses . . . . . . . . . . . . . . . . . . . . . . . .

16

3.5

Yearly Diesel Losses

. . . . . . . . . . . . . . . . . . . . . . . . .

17

3.6

Quarterly Gasoline Losses . . . . . . . . . . . . . . . . . . . . . .

18

3.7

Quarterly Gasoline Losses . . . . . . . . . . . . . . . . . . . . . .

19

3.8

Monthly Gasoline Losses . . . . . . . . . . . . . . . . . . . . . . .

21

3.9

Monthly Diesel Losses . . . . . . . . . . . . . . . . . . . . . . . .

22

3.10 Gasoline Losses By Site Code . . . . . . . . . . . . . . . . . . . .

23

3.11 Diesel Losses By Site Code . . . . . . . . . . . . . . . . . . . . . .

24

3.12 Gasoline Loss Rate of Gas Stations in Los Angeles Area . . . . . .

34

3.13 Gasoline Loss Rate of Gas Stations in Santa Barbara Area . . . .

35

3.14 Gasoline Loss Rate of Gas Stations in San Diego Area . . . . . . .

36

3.15 Gasoline Loss Rate of Gas Stations in Orange County . . . . . . .

37

3.16 The Regressed AR(1) Coefficients . . . . . . . . . . . . . . . . . .

39

3.17 The Regressed AR(1) Coefficients . . . . . . . . . . . . . . . . . .

40

vi

3.18 The Means and Medians of Regressed AR(1) Coefficients . . . . .

40

3.19 The Regressed AR(1) Coefficients . . . . . . . . . . . . . . . . . .

42

3.20 The Means and Medians of AR(1) Coefficients for Eight Years . .

42

3.21 The Regressed AR(1) Coefficients . . . . . . . . . . . . . . . . . .

43

3.22 The Means and Medians of AR(1) Coefficients for Six Years . . .

44

3.23 The Regressed AR(1) Coefficients . . . . . . . . . . . . . . . . . .

45

3.24 The Means and Medians of AR(1) Coefficients for Three Years . .

45

vii

List of Tables
2.1

Regional Data Distribution . . . . . . . . . . . . . . . . . . . . . .

2.2

Data of Gasoline and Diesel . . . . . . . . . . . . . . . . . . . . .

2.3

Data by Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.4

Data by Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.5

Data by Months . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1

Gasoline and Diesel Losses . . . . . . . . . . . . . . . . . . . . . .

11

3.2

Regional Means and Variances of Gasoline Data . . . . . . . . . .

13

3.3

Regional Means and Variances of Diesel Data . . . . . . . . . . .

14

3.4

Yearly Means and Variances of Gasoline . . . . . . . . . . . . . .

15

3.5

Yearly Means and Variances of Diesel . . . . . . . . . . . . . . . .

16

3.6

Quarterly Means and Variances of Gasoline . . . . . . . . . . . . .

18

3.7

Quarterly Means and Variances of Diesel . . . . . . . . . . . . . .

19

3.8

Monthly Means and Variances of Gasoline . . . . . . . . . . . . .

20

3.9

The Confidence Intervals of Monthly Data for Gasoline . . . . . .

20

3.10 Monthly Means and Variances of Diesel . . . . . . . . . . . . . . .

21

3.11 The Confidence Intervals of Monthly Data for Diesel . . . . . . .

22

3.12 Chi-square on Brands of Oil . . . . . . . . . . . . . . . . . . . . .

25

3.13 Chi-square test of regional data . . . . . . . . . . . . . . . . . . .

26

3.14 Chi-square test of pairwise regional data . . . . . . . . . . . . . .

26

3.15 Chi-square test on yearly data . . . . . . . . . . . . . . . . . . . .

27

3.16 Chi-square test on quarterly data . . . . . . . . . . . . . . . . . .

27

viii

3.17 Chi-square test on monthly data . . . . . . . . . . . . . . . . . . .

28

3.18 Tukey test on regional data . . . . . . . . . . . . . . . . . . . . .

29

3.19 Tukey test on yearly data . . . . . . . . . . . . . . . . . . . . . .

30

3.20 Tukey test on quarterly data . . . . . . . . . . . . . . . . . . . . .

31

3.21 Tukey test on monthly data . . . . . . . . . . . . . . . . . . . . .

31

ix

Acknowledgments
Many people have played an important part in the production of this thesis.
The people who have made excellent contributions and suggestions to this work
include Professor Jan de Leeuw, IT consultant from United Oil Company Stanley
Hecht, Lawyer Mark B. Gilmartin, CEO of United Oil Company Jeff Appel and
many people who I have not met but helped the the evolvement of this work.
I am particularly grateful to Professor Jan de Leeuw, who supervised me
on this project, guided me through the research and gave me many comments
that led to significant improvement, and to Stanley Hecht, who provided me
important informational support during the development of the thesis. Many
thanks to Professor Hongquan Xu and Professor Paik Schoenberg Frederic R. to
be in my master thesis committee.
Special thanks to my mother Fei Chen and my father Xingbo Yan who gave
me so much understanding and support. Without their help, I would not be able
to live in this beautiful campus and get a M.S. degree from UCLA.
Last but not the least, I would like to express my acknowledgement to the
Department of Statistics of UCLA and the United Oil Company. The opportunity they gave me to study and work on this project was definitely a precious
experience of my life and completed my study in UCLA.
Thanks again to all the friends I met in United States, Canada and China,
for the joy and laugh you shared with my life.

Vita

1983

Born, Wuhan, Hubei, China.

20012005

B.S. (Materials Science and Engineering), Shanghai Jiao Tong

University, Shanghai, Peoples Republic of China.

20052007

M.A.S. (Materials Science and Engineering), McMaster University, Hamilton, Ontario, Canada.

20072008

M.S. (Statistics), UCLA, Los Angeles, California, United

States.

xi

Abstract of the Dissertation

Statistical Analysis of Gasoline and Diesel Loss

Rates at Retailers
by

Xiaofei Yan
Master of Science in Statistics
University of California, Los Angeles, 2008
Professor DE LEEUW, JAN , Chair

It has been known in petroleum industry that fuel expands when the temperature increases and contracts when the temperature decreases. Gasoline has 1%
volumetric change for every 15 degree F change, and diesel has 0.6% volumetric
change for every 15 degree F change [1]. There have been a 60 degree Fahrenheit
standard for temperature correction of bulk deliveries of petroleum products.
However, as the temperatures the fuel was sold at were above 60 degree F at
many states, it is said every year overall 670 million additional gallons of gasoline
and 90 million additional gallons of diesel were consumed in U.S. because of the
fuel expansion [2]. Laws and rules about installation temperature-corrected kits
at dispensers are already on the way in many U.S. states. However, besides the
interestes of the individual consumers, the retailers who purchase bulks of fuel
from wholesaler are also experiencing the loss caused by fuel expansion. For the
sake of fairness, it is necessary to find evidence of fuel loss for the retailers if there
are litigations in the future. The purpose of this project is to determine whether
retailers were experiencing constant fuel loss, and what environmental elements
might influence on such fuel loss. It is also interesting to see whether the pattern

xii

of the fuel loss can be fitted by any models.

xiii

CHAPTER 1
Introduction
Fuel experiences significant expansion when temperature rises and contracts when
temperature falls. The energy content and the weight of the fuel does not change
with the temperature. The practice of selling fuel without temperature correction
seems deceptive to whoever buys it by volumetric gallon. For this reason, the
temperature effect on volume has been taken into account by the petroleum
industry.
Both gasoline and diesel are less dense than water. Gasoline easily evaporates
when it is exposed to room-temperature air while diesel does not. The gasoline
sold in California is actually a mixture of ethanol and gasoline, both of which
are volatile.thanol was blended with gasoline as an oxygen-enhancing additive for
gasoline [3]. The volume of the gasoline and ethanol mixture is larger than the
sum of the individual parts [3]. There are no API tables to calculate a volume
correction factor when mixing ethanol with gasoline. Hence the gasoline and
ethanol is blended by ratio onto the truck before the custody transfer, in order
to get rid of the volume expansion effects [3].
At wholesale level transactions, a 60 degree Fahrenheit standard is used for
temperature correction of gasoline by gallon [4] ,however, at retail sales, the
situation is different. No technology has been implied for the compensation to
the retailers of gasoline in United States. The effective price per gallon increases
as the amount of gasoline by weight decreases when the temperature exceeds 60

degree Fahrenheit. The enactment of laws requiring installation of devices for

temperature adjustment is under consideration by the United States Congress
and the California Legislature, in order to remove the heat premium from the
bills of retail customers. For the common interest of retailers who purchase bulk
oil and sell to customers, the accuracy of volumetric measurement at wholesale
level is required to be examined. Gasoline and Diesel both experience significant
expansion and contraction with temperature change. Current retail diesel is sold
at higher prices than gasoline because of strong domestic demand, unavailability
of import and high cost of manufacturing [5]. It is also suspected that the loss
caused by volumetric change during the delivery of fuel is more significant with
gasoline than diesel.
This project is focused on examining if any significant losses of diesel and
gasoline exist in the participating parties. The study covers data collected from
gas stations operating from 2001 to 2008 in the Los Angeles, Santa Barbara,
San Diego, and Orange Country regions. Determining which particular variables
correlate significantly with product loss is essential. The loss rates of gasoline
and diesel will be analyzed to see whether or not these losses are statistically
significant. The loss rates will also be examined in the context of type (gasoline
versus diesel), region, time period (year, quarter, monthly), and individual retail
gas station.

CHAPTER 2
Background
The losses of gasoline and diesel at 106 gas stations across four regions are
recorded monthly from September 2001 to July 2008. The loss of fuel is calculated as in Equation 2.1,
LOSS OF F U EL = P U RCHASE + ST ART EN D SALES.

(2.1)

where the PURCHASE represented the amount of fuel the gas station bought
during the month, the START and END represented the fuel stored at the beginning and the end of the month, the SALES represented the amount of fuel sold
during that month.
Hence, the fuel loss rate was calculated as a percentage of the monthly purchased amount, as seen in Equation 2.2,
LOSS RAT E = LOSS P U RCHASE 100.

(2.2)

These gas stations had different operation periods. Some of them started
since 2001, some started later, some shut down forever and some reopened and
was running till now. The gasoline and diesel are not both sold at every gas
station. Generally, the gasoline was sold more widely among these gas stations
than diesel. Some of these gas stations even switched from diesel to gasoline or
vice versa.

Hence, missing data is a big problem for this data set, especially for diesel.
Since we will first to see whether the gasoline had much loss than diesel, and if
this is proved to be true later, we can use the time series analysis model ARIMA
to handle the missing values.

2.1

Regions

The regions involved are Los Angeles, Santa Barbara, San Diego and Orange
County. Almost 75 % of the monthly records are from Los Angeles.The number
of the gas stations of each regions are listed as in Table 2.1 and the Figure 2.1.
Table 2.1: Regional Data Distribution
Regions

LA

SD

SD

OC

Total

monthly observations

5287

1226

702

423

7638

number of gas stations

72

18

10

106

LA

SD

OC

SB

Figure 2.1: Data by Regions

Looking into the data of Gasoline and Diesel separately, their structure are
presented as the Table 2.2 and Figure 2.2 and Figure ?? respectively,
Table 2.2: Data of Gasoline and Diesel
Regions
LA
SD SB OC TOTAL
Observations by Month
Gasoline

5087

1176

666

422

7351

Diesel

2359

793

119

409

3680

Gasoline

72

18

10

106

Diesel

34

12

54

Number of Gas Stations

Gas Data Structure

Diesel Data Structure

LA
LA

SD
SD
SB
SB

OC

OC

Figure 2.2: Data Structure

2.2

Time Variables

The data can be divided into groups according to the year, the quarter and the
month it was recorded. Determining the effects of the time variables on the gas

shortage is an essential task of this project. Details are illustrated as in the table
and graphs.

2.2.1

Yearly Data

According to the year it was recorded, the data was grouped into 8 sub-data
sets, as seen in Table 2.3. By doing this, we will be able to see the effects of
the different years on the fuel loss rate. If there was significant difference among
these years, we can further study on how and why the year had influenced on
the fuel loss rate compared to others. If not, we will be able to exclude the year
variable in our further analysis.
Since it covered the time period from September 2001 to July 2008, it can
be easily seen that the size of the sub-data set of 2001 was substantially smaller
than the size of the others. The size of the sub-data set of 2008 was comparably
smaller than the other years but much larger than that in 2001. These will be
considered at next step of analysis.
Table 2.3: Data by Years
Year
Number of observations

2.2.2

2001 2002 2003

2004

2005

2006

2007

2008

352

1040

1076

1129

1197

707

881

969

Quarterly Data

Our first suspicion is that temperature would be one of the major factors on the
fuel loss rate. This would easily direct us to detect any seasonal effect that exited
among the fuel loss rates. Hence, the data was divided into 4 groups according
to their time varialbes, as seen in Table 2.4. The first quarter was from January
to March, the second quarter was from April to June, the third quarter was from

July to September, and the last quarter was from October to December.
Table 2.4: Data by Quarters
Seasons

quarter 1

quarter 2

quarter 3

quarter 4

Gasoline

1842

1890

1782

1837

Diesel

920

968

880

912

From the Table 2.4 it can been seen that, the number of observations for each
quarter were generally even through the years.

2.2.3

Monthly Data

In order to see any significant effects of particular months, the data was also
analyzed based on the month it was recorded, as seen in the Table 2.5. The
numbers of observations are quite even over the 12 months.
Table 2.5: Data by Months
Month

Gasoline 611
Diesel

2.3

619 612 610 640

303 307 310 310

330

10

11

12

640

633

545

604

605

615

617

328

317

273

290

302

302

308

Site Code

To detect any extraordinarily different performance of certain gas stations, the

data was also analyzed based on the site codes of the gas stations. The data was
shown in the Figure 2.3 for gasoline and Figure 2.4 for diesel. It can be seen
again that, the total number of observations of gasoline was much larger than
that of diesel. For both kinds of fuel, most of the gas stations operated through
the 8 years, some of them only lasted for few months.

80
60

Number of Obervations

40
20
0
0

20

40

60

80

GAS STATIONS

Figure 2.3: Gasoline Data by Site Codes

100

80
60

Number of Obervations

40
20
0
0

10

20

30

40

GAS STATIONS

Figure 2.4: Diesel Data by Site Codes

50

CHAPTER 3
Methodology and Results
In order to detect the effects of the variables on the fuel loss rates, we used two
ways to test the equality of the average fuel loss rates. With the hypothesis
that all the means of the fuel loss rates of different groups were equal, as seen in
Equation 3.1,
H0 : 1 = . . . = k .

(3.1)

we used 2 test to test the validity of the hypothesis and Tukey method to
determine the pairs of treatments differed most.

3.1

Fuel Loss Rates

The distributions of the fuel loss rates can be roughly described by their means,
variance and standard deviations. Statistical analysis of the data under different
regions, years, quarters and months would be able to give indications of the effects
of these factors on fuel loss rates.

3.1.1

Gasoline and Diesel

The Table 3.1 listed the means, variances and standard deviations of gasoline and
diesel. The 95% confidence intervals were calculated as [0.21, 0.85] for gasoline
and [1.67, 1.29] for diesel respectively.

10

Table 3.1: Gasoline and Diesel Losses

Brand
Gasoline Diesel
Means

0.3157

-0.1912

Variances

0.0730

0.5678

Standard deviations

0.2702

0.7536

The distribution of the gasoline and diesel loss rates can aslo be described
by box plots, as seen in Figure 3.1. The box plots showed the locations of the
median, first and third quartiles of the data. It also measured the dispersion
of the data by presenting the possible outliers. Horizontal line were drawn at
the median, 25% and 75% quartiles and were joined by vertical lines to produce
the box. Besides, The whiskers extended from the quartiles and reached out to
the most extreme data points that were no more than one and half times of the
corresponding interquartile ranges from the box. The data beyond the vertical
lines were marked as asterisks or dots and usually considered as outliers [6]. The
graphs showed that the distribution of the gasoline and diesel were generally
symmetric. The whole box of gasoline was above zero while the median of diesel
was below zero. The number and distributions of outliers in the plots indicated
that the data of diesel were more dispersed than gasoline, which was consistent
with the large variance of diesel data.

11

1.5
1.0
0.5
0.0
0.5
1.5

1.0

Oil Loss Percentage

Gasoline

Diesel

Figure 3.1: Gasoline and Diesel Losses

3.1.2

By Region

The Table 3.2 presented the means, variances and standard deviations of gasoline
of the four regions. The 95% confidence intervals were calculated as [0.15, 0.85]
for Los Angeles, [0.32, 0.82] for Santa Barbara, [0.40, 0.83] for San Diego, and
[0.03, 0.68] for Orange County. The distributions of the regional gasoline loss
rates were presented by box plots in Figure 3.2.
It was shown that all the boxes in the Figure 3.2 were above zero. The medians
and means of gasoline loss rates were all positive. Moreover, the medians and
means of gasoline loss rates of Los Angeles and Orange County were close to each
other and were larger than those of Santa Barbara and San Diego. The variances
of gasoline loss rates of Santa Barbara and San Diego were larger than those of
the other two regions. Besides, it was also noticed that most of the data points

12

of Orange County were distributed above zero.

Table 3.2: Regional Means and Variances of Gasoline Data
Region

SB

OC

0.3454 0.2113

0.2489

0.3539

Variance

0.0652

0.0986

0.0855

0.0274

Standard deviation

0.2553

0.3140

0.2923

0.1655

SD

0.5
0.0
0.5
1.5

1.0

Gasoline Loss Percentage

1.0

1.5

Mean

LA

LA

SB

SD

OC

Figure 3.2: Regional Gasoline Losses

The Table 3.3 presented the means, variances and standard deviations of diesel
for the four regions. The 95% confidence intervals were calculated as [0.72, 1.36]
for Los Angeles, [1.03, 0.62] for Santa Barbara, [1.82, 1.35] for San Diego, and
[1.11, 0.72] for Orange County. The distributions of the regional diesel loss
percentages were seen in Figure 3.3. Compared with gasoline data, the means
and medians of diesel data were below zero. The variances of the data of diesel

13

were also much larger than those of gasoline. The data points were distributed
more evenly around zero.
Table 3.3: Regional Means and Variances of Diesel Data
LA

SD

SB

OC

Mean

-0.1771

-0.2309

-0.2022

-0.1923

Variance

0.6190

0.6534

0.1777

0.2187

Standard deviation

0.7868

0.8084

0.4215

0.4677

0.5
0.0
0.5
1.5

1.0

Diesel Loss Percentage

1.0

1.5

Region

LA

SB

SD

OC

Figure 3.3: Regional Diesel Losses

3.1.3

By Years

The yearly means and variances of Gasoline and Diesel were shown in Table
3.4. The 95% confidence interval of gasoline were calculated as [0.48, 0.79]
for 2001, [0.23, 0.73] for 2002, [0.19, 0.85] for 2003, and [0.10, 0.87] for 2004,

14

[0.23, 0.96] for 2005, [0.24, 0.88] for 2006, [0.17, 0.80] for 2007, and [0.12, 0.69]
for 2008. The distributions of the yearly gasoline loss percentages were shown in
Figure 3.4.
The boxes in the Figure 3.4 were all above zero except the one of year 2001.
There were significant differences among the distributions of the data points of
the year 2001,2002 and 2003. And the medians of the data became largest in the
year 2004.
Table 3.4: Yearly Means and Variances of Gasoline
Year

2003

2004

0.1565 0.2499

0.3276

0.3817

Variance

0.1039

0.0591

0.0704

0.0611

Standard deviation

0.3223

0.2432

0.2654

0.2473

Year

2005

2006

2007

2008

0.3623 0.3176

0.3186

0.2848

Variance

0.0927

0.0819

0.0614

0.0430

Standard deviation

0.3045

0.2862

0.2479

0.2073

Mean

Mean

2001

2002

Similarly, with the means, variances and standard deviations in Table 3.5,
the 95% confidence intervals of yearly diesel data were calculated as [3.18, 2.50]
for 2001, [1.26, 0.85] for 2002, [2.14, 1.74] for 2003, and [1.29, 1.04] for 2004,
[1.99, 1.68] for 2005, [1.27, 0.85] for 2006, [1.25, 0.90] for 2007, and [1.29, 0.81]
for 2008. The distributions of the yearly diesel loss rates were shown in Figure
3.5.
Compared with gasoline data, the means and medians of diesel data were
negative. From the box plots, it can be seen that, most of the data points tended
to distributed below zero. The variances of the diesel data were much larger than

15

1.5
1.0
0.5
0.0
0.5
1.5

1.0

Gasoline Loss Percentage

2001

2002

2003

2004

2005

2006

2007

2008

Figure 3.4: Yearly Gasoline Losses

that of gasoline data. But the variations among medians of different years were
much smaller than that of gasolines.
Table 3.5: Yearly Means and Variances of Diesel
Year

2001

2002

2003

2004

Mean

-0.3413

-0.2053

-0.2001

-0.1270

Variance

2.0994

0.2873

0.9763

0.3518

Standard deviation

1.4489

0.5360

0.9881

0.5932

Year

2005

2006

2007

2008

Mean

-0.1581

-0.2070

-0.1738

-0.2365

Variance

0.8782

0.2920

0.3027

0.2872

Standard deviation

0.9371

0.5404

0.5502

0.5359

16

1.5
1.0
0.5
0.0
0.5
1.5

1.0

Diesel Loss Percentage

2001

2002

2003

2004

2005

2006

2007

2008

Figure 3.5: Yearly Diesel Losses

3.1.4

By Quarter

The quarterly means, variances and standard deviations of Gasoline were shown
in Table 3.6. The 95% confidence intervals of gasoline were calculated as [0.16, 0.76]
for the 1st quarter, [0.30, 0.91] for the 2nd quarter, [0.21, 0.89] for 3rd quarter,
and [0.17, 0.81] for the 4th quarter. The distributions of the quarterly gasoline
loss rates were illustrated in Figure 3.6. Again, both the means and medians of
gasoline were positive. And the difference of quarterly gasoline loss rates was
largest between the 2nd and 3rd quarters.

17

Table 3.6: Quarterly Means and Variances of Gasoline

quarter 1

quarter 2

quarter 3

quarter 4

Means

0.2965

0.3072

0.3397

0.3206

Variances

0.0550

0.09524

0.0777

0.0626

Standard deviation

0.2346

0.3086

0.2788

0.2502

0.5
0.0
0.5
1.5

1.0

Gasoline Loss Percentage

1.0

1.5

Seasons

quarter 1

quarter 2

quarter 3

quarter 4

Figure 3.6: Quarterly Gasoline Losses

The quarterly means, variances and standard deviations of gasoline were
shown in Table 3.7. Hence the 95% confidence intervals of diesel were calculated
as [1.33, 0.92] for the 1st quarter, [1.72, 1.34] for the 2nd quarter, [2.11, 1.77]
for 3rd quarter, and [1.38, 0.99] for the 4th quarter. The distributions of the
quarterly diesel loss rates were illustrated in Figure 3.7. Again, compared with
the data of gasoline, both the means and medians of diesel were negative, and the
corresponding variances were also much larger than those of quarterly gasoline

18

data.
Table 3.7: Quarterly Means and Variances of Diesel
quarter 1

quarter 2

quarter 3

quarter 4

Means

-0.2041087

-0.1923

-0.1721

-0.1953

Variances

0.3283

0.6104

0.9806

0.3673

Standard deviation

0.5730

0.7813

0.9902

06061

0.5
0.0
0.5
1.0
1.5

Diesel Loss Percentage

1.0

1.5

Seasons

quarter 1

quarter 2

quarter 3

quarter 4

Figure 3.7: Quarterly Gasoline Losses

19

3.1.5

By Month

The monthly means, variances and standard deviations of Gasoline were in Table
3.8. The 95% confidence intervals of gasoline were listed in the table 3.9. The
distributions of the monthly gasoline loss rates were illustrated in Figure 3.8. It
was noticed again that all the monthly gasoline loss rates had positive means and
medians. Besides, both the means and medians became largest in the August.
Table 3.8: Monthly Means and Variances of Gasoline
Months

Means

0.2948

Variances

0.0463

0.3034 0.2911

0.3062

0.3075

0.3078

0.0564

0.0625

0.1027

0.0869

0.0967

Std. deviation 0.2151 0.2375 0.2500

0.3205

0.2949

0.3110

10

11

12

Months

Means

0.3482

0.3530 0.3187

0.3178

0.3249

0.3192

Variances

0.0727

0.0800

0.0806

0.0693

0.0707

0.0482

Std. deviation 0.2696 0.2828 0.2839

0.2632

0.2659

0.2196

Table 3.9: The Confidence Intervals of Monthly Data for Gasoline

Month

Intervals [ -0.13, 0.72 ]

Month

Intervals [ -0.27, 0.89 ]

Month

Intervals [ -0.24, 0.88 ]

[ -0.16, 0.77 ]

[ -0.20, 0.78 ]

[ -0.32, 0.93 ]

[ -0.30, 0.92 ]

[ -0.18, 0.88 ]

[ -0.20, 0.91 ]

10

11

12

[ -0.20, 0.83 ]

[ -0.20, 0.85 ]

[ -0.11, 0.75 ]

The monthly means, variances and standard deviations of Diesel is in Table

3.10.The 95% confidence intervals of gasoline were listed in the Table 3.11. The

20

1.5
1.0
0.5
0.0
0.5
1.5

1.0

Gasoline Loss Percentage

10

11

12

Figure 3.8: Monthly Gasoline Losses

distributions of the monthly diesel loss rates were shown in Figure 3.9. Compared
with the gasoline data, the means and medians were all negative and were not
largest in August.
Table 3.10: Monthly Means and Variances of Diesel
Months

Means

-0.2645

-0.1734

-0.1756

-0.1624

-0.1757

-0.2374

Variances

0.4437

0.1952

0.3442

0.2247

0.2115

1.3769

Std. deviation

0.6661

0.4418

0.5867

0.4740

0.4599

1.1734

Months

10

11

12

Means

-0.1491

-0.2595

-0.1151

-0.2430

-0.1116

-0.2307

Variance

0.3069

2.4646

0.3164

0.6774

0.1449

0.2734

Std. deviation

0.5540

1.5699

0.5624

0.8231

0.3806

0.5228

21

Table 3.11: The Confidence Intervals of Monthly Data for Diesel

Month

Intervals [ -1.57, 1.04 ]

Month

[ -1.04, 0.69 ]

[ -1.33, 0.97 ]

[ -1.09, 0.77 ]

[ -2.54, 2.06 ]

[ -1.23, 0.94 ]

[ -3.34, 2.82 ]

10

11

12

[ -1.85, 1.37 ]

[ -0.86, 0.63 ]

[ -1.26, 0.79 ]

Intervals [ -1.08, 0.72 ]

Month

0.5
0.0
0.5
1.5

1.0

Diesel Loss Percentage

1.0

1.5

Intervals [ -1.22, 0.99 ]

10

11

12

Figure 3.9: Monthly Diesel Losses

3.1.6

By Sitecode

The distribution of the gasoline loss rates for the 106 gas stations were illustrated
in Figure 3.10. Most of the gas stations had positive medians of gasoline loss rates
except the number 130 gas station, of which the box was the only one below zero
in the Figure 3.10. It was found out that this gas station only sold gasoline for

22

0.0
1.0

0.5

Gasoline Loss Percentages

0.5

1.0

three months but ended with negative loss rates for that periods.

101

110

124

134

145

154

164

173

184

514

523

532

Site Code

Figure 3.10: Gasoline Losses By Site Code

Similarly the distribution of diesel loss rates of the 106 gas stations were
illustrated in Figure 3.11. Compared with gasoline data, it was noticed that the
medians of the diesel loss rates were much closer to zero or even below zero.
There were few gas stations like 160 and 537 had their boxes of diesel loss rates
above zero. The gas station 144 had the lowest box of diesel loss rates according
to the Figure 3.11.

23

2
1
Diesel Loss Percentages

0
1
2
102

119

132

144

152

160

168

504

515

521

Site Code

Figure 3.11: Diesel Losses By Site Code

24

530

3.2

2 Test

With the means of fuel loss rates mi , and the corresponding variances s2i , we
minimize
c() =

n1
n2
nk
(m1 )2 + 2 (m2 )2 + . . . + 2 (mk )2 .
2
s1
s2
sk

(3.2)

over , where k is the number of regions, years, quarters, months, gas station site
codes [7]. The minimized c(
) should be asymptotically a 2 with k 1 degree
of freedom if the k groups have the same mean. In this way, both of the
and
the c(
) were obtained. And a corresponding p-value was converted from the 2
statistics for making the decision of rejection [8].

3.2.1

Gasoline and Diesel

It was observed that the gasoline loss rates tended to be positive while the diesel
loss rates tended to be negative. Suspicion had been around that the loss of
gasoline per gallon can be higher than that of diesel. Undetermined volumetric
changes might be led to by some unknown chemical and physical reactions between the gasoline and ethanol. Comparing the loss rates of gasoline and diesel
sold at same gas station would help reveal the facts.
The 2 test results were presented in Table 3.12. The p-value was almost 0,
which indicated an extreme significance level and a rejection of the null hypothesis
that Gasoline and Diesel experienced same volumetric loss rates.
Table 3.12: Chi-square on Brands of Oil
Results

c()

pvalue

Gasoline vs. Diesel

0.2851

1564.610

25

3.2.2

Regional Results

As illustrated in the Table 3.2 and the Table 3.3, the gasoline loss rates had
significant regional variations, while the Diesel did not. The 2 tests on regional
gasoline data and diesel data were listed in Table 3.13. The small p value of gasoline data indicated there were detectable differences among gasoline loss rates of
the 4 regions. The much larger p value of diesel data showed that at a significance
level of 4% there were no detectable differences among diesel loss rates of the 4
regions.
Table 3.13: Chi-square test of regional data
Results

c()

pvalue

Gasoline

0.3258

244.6932

9.1950e-53

Diesel

-0.1917

2.7471

0.4323

The pairwise 2 tests on regional gasoline data, as presented in Table 3.14,

showed that at significance level of 1% there were big difference between LA and
SB, LA and SD, SB and OC, OC and SD. The gasoline loss rates of LA and OC
were the most close pair, where the pair of SB and SD was the second.
Table 3.14: Chi-square test of pairwise regional data
Results

c()

pvalue

LA vs. SB

0.3367

66.0619

4.3700e-16

LA vs. OC 0.3468

0.9166

0.3383

LA vs. SD

0.3278

186.1303

2.2236e-42

SB vs. OC

0.3186 57.04805

4.2529e-14

SB vs. SD

0.2262

6.6531

0.0099

OC vs. SD

0.2917

136.6207

1.4596e-31

26

3.2.3

Yearly Results

The fuel losses varied each year. The 2 test was performed on the 8-year data
to find out if any detectable difference existed. The pvalue of gasoline data
indicated that there was significant variations of losses among the eight years.
The comparably much larger p value of diesel data indicated that there was no
detectable difference existed at a significance level of 5%.
Table 3.15: Chi-square test on yearly data
Results

c()

pvalue

Gasoline

0.3146

267.3266

5.654e-54

Diesel

3.2.4

-0.1884 12.51671

0.0848

Quarterly Results

Because the the data recorded in 2001 started from September to December and
the means and variances of year 2001 were relatively lower than the others, as
seen in Table 3.4, the equality of the quarterly loss rates were tested to see any
seasonal effects existed. The small p value in the Table 3.16 indicated that
significant differences were among the quarterly gasoline loss rates and there was
seasonal effect on gasoline loss rates. The large p value of diesel data indicated
that there was no detectable differences among the quarterly diesel loss rates and
hence no seasonal effects on the diesel loss rates.
Table 3.16: Chi-square test on quarterly data
Results

c()

pvalue

Gasoline

0.3150

27.2049

3.5343e-07

Diesel

-0.1972

0.7769

0.8550

27

3.2.5

Monthly Results

Detecting any surges of fuel loss rates in certain months and finding out the
difference of these months would help determine the causes of fuel loss. In the
Table 3.17, the small p values of gasoline and diesel indicated that big difference existed among monthly loss rates. The much smaller p values of gasoline
indicated that the significance for gasoline data was more extreme than that of
diesels. The variations among the gasoline loss rates should be relatively larger
than that of diesels if measured at certain significance level.
Table 3.17: Chi-square test on monthly data
Results

c()

pvalue

Gasoline

0.3146

34.3155

0.0003

-0.1705 25.0979

0.0088

Diesel

3.2.6

Sitecode Results

Determine whether all the gas stations were experiencing same losses would help
detect any specific gas station that had significant loss compared with others.
The performed 2 test results were illustrated in the Equation 3.3 for gasoline
and Equation 3.4 for diesel. The results showed that the both of them were
extremely significant, and there were no doubt that losses of each gas station
were statistically different. By looking at the box plots in Figure 3.10 and Figure
3.11 and the means of the fuel loss rates, it was found that, the gas stations
101, 102, 108, 160 and 182 had the highest positive gasoline loss rates, while gas
stations 146,177 and 537 had the most negative diesel loss rates.

= 0.3303, c() = 4422.835, p value = 0

28

(3.3)


= 0.0526, c() = 1310.876, p value = 0

3.3

(3.4)

Multiple Comparisons

After testing the equality of data groups, it is interesting to continue testing the
mutual differences of group members that had been identified as different. We
used the Tukey Method to perform the analysis [9]. The algorithm of this method
was illustrated in the Equation 3.5. The t statistic to test i = j vs. i 6= j was
mj mi
tij = q

n1j + n1i
where
=

(3.5)

M SE . By the Tukey Method, i differents from j if |tij | > 12 qk,N k,

where qk,N k, was the upper quantile of the Studentized range distribution,with
parameter k and N k degree of freedom.

3.3.1

By Region

At 10% significance level, if |tij | > 3.1143, i differs from j . Comparing with the
numbers in Table 3.18, we concluded that, the pairs of LA and SB, LA and SD,
SB and OC, OC and SD were significantly different, while the pairs of LA and
OC, SB and SD were close.
Table 3.18: Tukey test on regional data
LA vs. SB LA vs. OC
-8.8563

0.6298

LA vs. SD

SB vs. OC

SB vs. SD

OC vs. SD

-15.6679

6.3784

-2.9282

-9.4961

29

3.3.2

By Year

Since the 2 tests on diesel yearly loss rates indicated there were not much detectable difference among the yearly data, we applied the Tukey test only to the
gasoline data. The Tukey results were as presented in the Table 3.19, where 1
stands for 2001, 2 stands for 2002 and so on so forth. The loss rates of 2004 and
2005 were close, and the loss rates of 2003, 2006 and 2007 were close. The loss
rates of 2001, 2002 and 2008 were significantly different from any of the other
years respectively. Combining this statement with the numbers in Table 3.4, it
can told that the gasoline loss rates increased from the year 2001 to 2003, and
peaked around the years 2004 and 2005. Afterwards, it dropped during 2006, of
which the gasoline loss rates were close to that of the year 2003. After 2007, the
level of gasoline loss rates only went down little in the 2008.
Table 3.19: Tukey test on yearly data

3.3.3

1 vs. 2

1 vs. 3

1 vs. 4

1 vs. 5

1 vs. 6

1 vs. 7

1 vs.8

5.5984

10.3918 13.8015

12.6674

9.9717

10.1019

7.4340

2 vs. 3

2 vs. 4

2 vs. 5

2 vs. 6

2 vs. 7

2 vs. 8

6.3090

10.8770

9.3494

5.6887

5.8458

2.6129

3 vs. 4

3 vs.5

3 vs. 8

4 vs.6

4 vs.7

4 vs.8

4.5768

2.9603

-3.2706

-5.6379

-5.6274

-7.51010

5 vs.6

5 vs.7

5 vs.8

6 vs.8

7 vs.8

-3.9685

-3.9349

-6.0494

-2.5812

-2.6894

By Quarter

Similarly, since the 2 tests on diesel quarterly loss rates indicated there were
not much detectable difference exsited, we applied the Tukey test only to the

30

gasoline data. The results listed in the Table 3.20 showed that, the quarterly
gasoline losses were mutually close except the pairs of quarter 1 and quarter 3,
and quarter 2 and quarter 3. Combining these statement with the figures in Table
3.6, it can be concluded that gasoline loss rates were stable during the 1st and
2nd quarters. It increased significantly in the 3rd quarter and dropped a little
in the 4th quarter and went back to the level that was close to that of the 2nd
quarter.
Table 3.20: Tukey test on quarterly data

3.3.4

quarter 1 vs. quarter 3

quarter 2 vs. quarter 3

4.9150

3.3493

By Month

Since both the p values of gasoline and diesel data were small by the 2 test,
Tukey tests were performed on gasoline monthly data and diesel monthly data
respectively. The test results for gasoline monthly data were shown in Table
3.21. Combining the results in Table 3.21 with the numbers in Table 3.8, it
can be concluded that the gasoline loss rates were stable from January to June,
increased in July and August and then dropped little a bit in September and
stayed stable afterwards. The results of Tukey test on diesel data showed there
was no one pair was significantly different.
Table 3.21: Tukey test on monthly data
1 vs. 8 3 vs. 7

3 vs. 8

3.7331

3.9688

3.8030

31

3.3.5

By Sitecode

As concluded in Equation 3.3 and Equation 3.4, the fuel loss rates varied significantly among different gas stations. Tukey results showed that, at the significant
level of 1%, huge difference of gasoline loss rates existed among 2220 pairs of gas
stations. Only the pair of gas station 160 and 177 was significantly different in
diesel loss rates at the significant level of 5%.

3.4

Time Series Analysis on Gasoline Loss Rate

It is interesting to do some time series analysis on the monthly recorded gas loss
data. As there were too many discontinuities in the observations for diesel, the
work were focused on the gasoline data.
The gasoline loss rates of Los Angeles area from the year 2001 to the year
2008 were presented in the first graph of the Figure 3.12. The corresponding
zoomed plot was presented in the second graph of the Figure 3.12. The graphs
described the loss rates of eight randomly selected gas stations for Los Angeles
area. It can be seen that some gas station had more than one peak, and some
had its negative peak just followed by its positive peak. It was also noticed that
the gasoline loss rate drop and rise within one year. Although the fluctuations
of the curves, an rough increasing trend can be observed from the year 2001 to
the year 2003. The peaks of the curves concentrated during period of 2004 and
2005, especially the middle of the year 2005.
The gasoline loss rates of most of the gas stations in Santa Barbara area were
shown in the Figure 3.13. All the peaks were in the summer months of that
year, and most of them were in the year 2004 and 2005. It was observed that
at some months of the year, symmetric peaks appeared together at the two sides

32

of zero. It was suspected that, because of a false record of gasoline loss in the
previous month, it had been corrected by a corresponding gain immediately in
the following month. Taking these pairs of symmetric peaks out of the curves,
an increasing trend of gasoline loss rate can be observed from the year 2001 to
2003.
The gasoline loss rates of gas stations in San Diego area were presented in
the Figure 3.14. Besides the similar fluctuations and symmetric peaks observed
in Figure 3.13, a decreasing trend of gasoline loss rates was observed during the
period of 2001 to 2003. The curves fluctuated at zero and slightly rose up and
peaked between 2004 and 2005.
In the Figure 3.15, an increasing trend was observed among the gasoline loss
rates of gas stations in Orange County area. The curves peaked mostly in the
year 2004 and 2005 and significant increases of gasoline loss rates were observed
generally in the summer months of the year.
From the observations above, it can be concluded that gasoline loss rates were
similarly between Los Angeles and Orange County area and were different from
those in the Santa Barbara and San Diego areas.

33

6
4
2
0
2
4

Gas Loss Rate of Individual Gas Station in Los Angeles Area

Station 101
Station 102
Station 104
Station 107
Station 118
Station 144
Station 152
Station 508

2002

2003

2004

2005

2006

2007

2008

2006

2007

2008

1.5
1.0
0.5
0.0
0.5
1.0

Gas Loss Rate of Individual Gas Station in Los Angeles Area

2.0

Time

2002

2003

2004

2005
Time

Figure 3.12: Gasoline Loss Rate of Gas Stations in Los Angeles Area

34

6
4
2
0
2
4

Gas Loss Rate of Individual Gas Station in Santa Barbara Area

Station 112
Station 136
Station 147
Station 153
Station 156
Station 516

2002

2003

2004

2005

2006

2007

2008

2.5
2.0
1.5
1.0
0.5
0.0
0.5
1.0

Gas Loss Rate of Individual Gas Station in Santa Barbara Area

Time

2002

2003

2004

2005

2006

2007

2008

Time

Figure 3.13: Gasoline Loss Rate of Gas Stations in Santa Barbara Area

35

6
4
2
0
2
4

Gas Loss Rate of Individual Gas Station in San Diego Area

Station 132
Station 517
Station 518
Station 519
Station 521
Station 523
Station 524
Station 526

2002

2003

2004

2005

2006

2007

2008

2006

2007

2008

1.5
1.0
0.5
0.0
0.5
1.0

Gas Loss Rate of Individual Gas Station in San Diego Area

2.0

Time

2002

2003

2004

2005
Time

Figure 3.14: Gasoline Loss Rate of Gas Stations in San Diego Area

36

4
3
2
1
0
1
2

Gas Loss Rate of Individual Gas Station in Orange County Area

Station 127
Station 158
Station 159
Station 162
Station 515

2002

2003

2004

2005

2006

2007

2008

2006

2007

2008

1.0
0.5
0.0
0.5
1.0

Gas Loss Rate of Individual Gas Station in Orange County Area

Time

2002

2003

2004

2005
Time

Figure 3.15: Gasoline Loss Rate of Gas Stations in Orange County

37

3.4.1

AR(1) Model

The autoregressive models are processes of regressions on themselves [10]. Here,

we consider the first order model-AR(1) for the time series analysis of our data.
With the assumption that the series is stationary and the model satisfies the
Equation 3.6,

Yt = Yt1 + et ,

(3.6)

The innovation term et is uncorrelated with the past Yt1 , Yt2 , ... and is
added for explaining the new things happen in the series at time t. In the
application of the AR1, we will focus on the coefficient of the model and the
difference of the s of gas stations.
As seen in the Figure 3.16, the median of the P hi was 0.75, the range of the
coefficients is [0.1, 0.98]. The upper and lower quartiles are within the range
of [0.5, 1.0]. It can be concluded that the gasoline loss rates were influenced by
their past values and most of the series of values were positively related.

3.4.2

AR(1) Regression on Months

Taking the effect of months into consideration, we regressed the gasoline loss
rates on the twelve months. The value of the month was set as Xi = 1 if it is at
the ith month, otherwise it is 0. The mi is the coefficient of the variable Xi . The
model had thirteen variables and was presented in the Equation 3.7.

Yt = Yt1 +

i=12
X

mi Xi + et ,

(3.7)

i=1

The distributions of the P his and the coefficients of the twelve months were

38

1.5
1.0
0.5
0.5

0.0

AR(1) Coefficients

Phi

Figure 3.16: The Regressed AR(1) Coefficients

depicted in the Figure 3.17. Most of the coefficients are positive except some of
the P his. Plot the medians and means of these coefficients in a graph and we will
be able to see the different effects of them on the gasoline loss rates. As seen in
the Figure 3.18, the month July had the largest median and the month August
was the second. The value of the P hi was medium. And the month January and
March had the lowest medians.
The means of the coefficients were generally higher than the corresponding
medians except those of P his. This was due to the many outliers above the boxes
dragged the means of the coefficients up. The P hi had lowest bottom range. If
both the means and medians are taken into consideration, the largest coefficients
still should be at July.

39

3
2
1
1

AR(1) Coefficients

Phi

Jan

Feb

Mar

Apr

May

Jun

July

Aug

Sept

Oct

Nov

Dec

0.50

Figure 3.17: The Regressed AR(1) Coefficients

0.40
0.35
0.25

0.30

Regressed Coefficients

0.45

Median
Mean

Phi

Jan

Feb

Mar

Apr

May

Jun

July

Aug

Sept

Oct

Nov

Dec

Figure 3.18: The Means and Medians of Regressed AR(1) Coefficients

40

3.4.3

AR(1) Regression on Years

Again, due to the discontinuous operations in the 106 gas stations it was not
possible to regressed the gasoline loss rates on all the eight years. With this
concern, the gas stations were grouped according to their operation periods and
regressed on the years besides themselves. For example, the model of the eight
year operation was presented in the Equation 3.8. Similarly, the value of the year
was set as Xi = 1 if it was operated in the ith year, otherwise it was 0. The mi
was the coefficient of the variable Xi .

Yt = Yt1 +

i=2008
X

mi Xi + et ,

(3.8)

i=2001

The distributions of the regressed coefficients of the P hi and the eight variables were presented in the Figure 3.19. It can be seen that, most of the variables
coefficients were above zero. In this yearly AR(1) model, the value of the P hi
was quite close to zero. The influence of gasoline loss rate on itself would be small
compared to the other variables. The large median of the year 2004 indicated its
significant effect on the gasoline loss rates.
The means of the coefficients had the highest value in the year of 2002. The
big difference between the median and mean of year 2002 can be explained by
the outliers above the box in the Figure 3.20.
The predications by the medians seemed to be more consistent with the analysis results already obtained. Combining the observations in Figure 3.19 and
Figure 3.20, it can be at least concluded that the in this model the variables
2002 and 2008 as well as 2004 should be significant. There were increasing trends
between the year 2001 and 2002, and between the year 2003 and 2004.

41

2.0
1.5
1.0
0.5
1.0

0.5

0.0

AR(1) Coefficients

Phi

2001

2002

2003

2004

2005

2006

2007

2008

1.0

Figure 3.19: The Regressed AR(1) Coefficients

0.6
0.4
0.0

0.2

Regressed Coefficients

0.8

Median
Mean

Phi

2001

2002

2003

2004

2005

2006

2007

2008

Figure 3.20: The Means and Medians of AR(1) Coefficients for Eight Years

42

The distributions of the regressed coefficients for the gas stations operated
from 2003 to 2008 were presented in the Figure 3.21. The model was explained
as in the Equation 3.9.

Yt = Yt1 +

i=2008
X

mi Xi + et ,

(3.9)

i=2003

In Figure 3.21, it was noticed that most of the P his coefficients were below
zero. In the Figure 3.22, both the median and mean of P hi were negative. This
indicated that the series of the gasoline loss rates should be negatively related
with themselves. Again the largest median was in the year 2004. However, the
largest mean was in year 2008. As we know, the data of 2008 only included
the months from January to July. The incomplete data might overestimate the

0.5
0.0
0.5
1.0

AR(1) Coefficients

1.0

1.5

2.0

gasoline loss rate due to the lack of winter months data.

Phi

2003

2004

2005

2006

2007

2008

Figure 3.21: The Regressed AR(1) Coefficients

43

0.4
0.2
0.2

0.0

Regressed Coefficients

0.6

Median
Mean

Phi

2003

2004

2005

2006

2007

2008

Figure 3.22: The Means and Medians of AR(1) Coefficients for Six Years
As seen in the Figure 3.23 and the Figure 3.24, the regressed coefficients
showed that the series of gasoline loss rates had major effects from themselves.
Both the median and mean curves showed a decreasing significance of effects on
gasoline loss rates for the four variables. These gas stations distributed in Los
Angeles, Santa Barbara and San Diego areas and there was nothing related with
the regions.
In summery, the number of time variables in the model decreased, the significance of P hi increased. In the model with nine regressors, the Phi most
close to zero and the gasoline loss rates had the lowest correlation with itself.
When the regressors were reduced from nine to seven, the importance of the past
gasoline loss rate increased and the importance of the other time variables decreased. When the regressors were reduced from seven to four, the effect of the
past gasoline loss rates dominated and the other regressors continuously lost their

44

1.0
0.5
0.5

0.0

AR(1) Coefficients

Phi

2006

2007

2008

0.30

Figure 3.23: The Regressed AR(1) Coefficients

0.20
0.15
0.10
0.00

0.05

Regressed Coefficients

0.25

Median
Mean

Phi

2006

2007

2008

Figure 3.24: The Means and Medians of AR(1) Coefficients for Three Years

45

importance in the model. Generally, we believe the year 2004 had the most significant effects on the gasoline loss rates when it was included in the model. And
the model with nine regressors was the most acceptable one among the three.

46

CHAPTER 4
Conclusions and Discussions
4.1

Conclusions

1.Most of the gasoline loss rates under study were above zero, while most of
the diesel loss rates were below zero.The average loss rates of gasoline tended
to exceed the average loss rates of diesel. While the means and medians of the
gasoline loss rates were above zero, the means and medians of the diesel loss rates
were much closer to zero or below zero.
2.The Los Angeles and Orange County gasoline loss rates were close and were
a little higher than those of Santa Barbara and San Diego areas. For diesel, there
was not a measurable difference among these regions.
3. There was an increasing trend in gasoline loss rate from year 2001 to 2003.
The loss peaked in 2004 and 2005, and slightly went down during 2006 and was
stable in 2007 and 2008. The variations of diesel yearly loss rates were barely
detectable compared with gasoline data.
4. There was a little increase of gasoline loss rates in the third quarter, which
may be related to the high temperature of summer time. Generally, the variations
of quarterly gasoline loss rates were not much. The situation of diesel was different
from gasoline. The distribution of diesel loss rates were more symmetric around
zero. And there was barely difference among the quarterly diesel loss rates.

47

5. There was a slow increasing trend of gasoline loss rates from January to
August, after that the curve dropped slightly and was stable after September.
There was no obvious variations in the monthly diesel loss rates. It repeatedly
fluctuated at a certain level. There was much less detectable difference among
the diesel loss rates than gasoline loss rates.
6. The 2 test on gasoline and diesel showed that the loss rate of the two were
significantly different. Combining the observations in the first point, it can be
concluded that the loss rate of gasoline was generally higher than that of diesel.
7.The 2 test on regional gasoline loss rates and diesel loss rates indicated
that the loss rates of gasoline were related with regions while those of diesel were
not. Combining the observations stated in the second point, it can be concluded
that the loss rates of gasoline in LA and OC were higher than those in SB and
SD.
8.The 2 test on yearly, quarterly, and monthly gasoline and diesel loss rates
indicated that the loss rates of gasoline were related to the time periods, while
those of diesel were not.
9. The 2 test on gasoline and diesel loss rates of gas station marked by site
codes indicated that, the loss rates of gasoline and diesel were different respectively at each gas station.
10. The Tukey test on regional loss rates confirmed that the gasoline loss
rates of LA and OC were significantly different from those of SB and SD, where
the most different pair was LA and SD.
11. The Tukey test confirmed the increasing trend of loss rates from the year
of 2001 to 2004 and the decreasing trend from 2004 to 2008. The most different
pair was determined to be years of 2001 and 2004.

48

12. The Tukey test again confirmed the slight increasing trends of gasoline loss
rates from the first quarter to the third quarter. The same test on the monthly
data confirmed that the highest gasoline loss rate was around August, while the
lowest one was around January. Combining these two statements above, it can
be suggested that the gasoline loss rates increased in the time periods when the
temperatures were high.
13. The Tukey test confirmed the big variations among the loss rates of gas
stations for both gasoline and diesel.
14. The time series analysis confirmed that most of the gasoline loss rates
peaked in the year 2004.
15. The gasoline loss rates were not much related with their past values when
the data was as well regressed on the eight year variables. This correlation tended
to be increased when the number of time variables decreased.

4.2

Discussion

1. The higher loss rates of gasoline compared with diesel might be related to the
environmental temperatures. The mixture of ethanol and gasoline are volatile,
significant loss might be resulted when gasoline was exposed to air.
2. The relatively higher loss rates of gasoline in LA and OC than in SB and
SD might be related to the local environmental temperature as well. This needs
to be studied with the weather of LA, OC, SB and SD for during the period of
time.
3. To determine what made the gasoline loss rates increased from 2001 to
2004, the weather and temperatures of the regions involved in this study would
be needed to look at. Besides, the temperature differences among years and the

49

seasons of the year can both be looked into.

4. Because not every gas station were operated through the recorded period, it
was not possible to regress the data on the months and years together. Separating
the data into groups according to their operation periods seriously reduced the
data size and hence harmed the representation of the analysis results. We chose
the AR model which had the eight years as regressors to be the most reasonable
one for its largest available data.
5. Although the diesel loss rates were close to zero, they were also tended
to be negative. It was not reasonable that diesel sales would have negative loss
every month except that there was also something wrong with the measuring
standards. This could be studied in further work.

50

References
[1] J. Siebert, Temperature Compensation at the Retail Pump, Tech. rep.,
Owner-Operator Independent Drivers Association (2007).
[2] www.users.qwest.net/ taaaz/AZgas.html, Buying gasoline in arizona why
not fairness at the pump.
[3] www.toptech.com, Application: Ethanol blending with multiload.
[4] D. J. Kucinich, Staff report of the domestic policy subcommittee majority
staff oversight and government reform committee house of representatives
(2007).
[5] www.api.org/Standards/, Api.
[6] J. A. Rice, Mathematiccal Statistics and Data Analysis (Duxbury Press,
1995), chap. 10, p. 372, 2nd ed.
[7] J. A. Rice, Mathematical Statistics and Data Analysis (Duxbury Press,
1995), chap. 14, p. 507, 2nd ed.
[8] J. A. Rice, Mathematiccal Statistics and Data Analysis (Duxbury Press,
1995), chap. 13, p. 483, 2nd ed.
[9] J. A. Rice, Mathematical Statistics and Data Analysis (Duxbury Press,
1995), chap. 12, p. 451, 2nd ed.
[10] K. S. C. Jonathan D. Cryer, Time Series Analysis With Application in R
(Springer, 2008), 2nd ed.

51