Prices of crude oil have been steadily rising over the last two years (The Wall Street Journal, December 14, 2010). Consider the following portion of monthly data on price per gallon of unleaded regular gasoline in the U.S from January 2009 to December 2010; the full data set can be found on the text website, labeled Gas Price Forecast.
a. Plot the above series to identify an appropriate polynomial trend model. You may ignore seasonality.
b. Compare the adjusted R2 of the linear, the quadratic, and the cubic trend models.
c. Use the appropriate model to make a forecast for the price of regular unleaded gasoline for January and February of 2011.