Alternative fuels have become increasingly important in the U.S. fuel market in the last few decades. While most previous literature has focused on oil, gasoline, and biofuel prices, the studies on the topic of multiple alternative fuel prices across regions were limited. Using the fuel price data from seven U.S. districts, our study investigates the horizontal price transmission between gasoline and alternative fuels, as well as the vertical price transmission between marginal costs and alternative fuels. Our analysis reveals a deeply integrated U.S. fuel market. Specifically, a 1% rise in gasoline prices corresponds to a 0.811% increase in ethanol prices and a 1.053% increase in biodiesel prices. This positive connection is further confirmed when analyzing price returns, indicating that alternative fuel prices move in tandem with their substitutes. Additionally, the examination of vertical price transmission reveals that higher marginal cost of propane is associated with rising propane prices.
