>Provided that linearity assumption is reasonable. As I understand, the
>regression equation your cited was determined from historical data, but the
>projections go beyond the range of the historical data i.e. the price did
>not go beyond $2.30 at the pump or $50 crude.
True, but real crude prices today are well below the $80 real (CPI) level of 1980.
You could also argue that nonlinearity would work the other way - that as oil prices rise, the ratio of retail gas prices to crude could decline, since some of the markup is attributable to refining, transportation, and other overhead costs (and taxes) that bear little or no relation to oil prices.
Doug