There’s been a lot of discussion recently about the effects of high gasoline prices on the quantity demanded of gasoline, as well driving behavior (Jim Hamilton, Jim Hamilton, CR, CR, Paul Krugman). David Austin, whose work I have cited often on this blog, gave a fascinating presentation, entitled “Effects of Gasoline Prices on Driving Behavior and Vehicle Choice” at the recent Society of Government Economists conference in Washington, DC a couple of weeks ago. In it, he tackles some of these issues. (Note, these are his own personal views and do not necessarily represent the views of any specific organization.)
I could discuss each of the graphs in detail, but I think I will let them speak for themselves.
Figure 1: Gasoline consumption has declined as prices have increased. Source: D. Austin, Presentation at SGE, June 2, 2008.
Figure 2:With Higher Gasoline Prices, a Historic Shift in Vehicle Choice. Source: D. Austin, Presentation at SGE, June 2, 2008.
Figure 3:As Gas Prices Doubled (+ $1.50) Fuel Economy Increased by 1 mpg (Helped by higher CAFE standards for light trucks). Source: D. Austin.
Figure 4:Evidence from used-car market. Source: D. Austin, Presentation at SGE, June 2, 2008.
In the presentation, he also analyzes responses in the areas of volume and speed of freeway traffic, rail-transit ridership, and market share of cars vs light trucks.
Some discussion of these issues can be found in this document: Effects of Gasoline Prices on Driving Behavior and Vehicle Markets (January 2008).