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Recent changes in the price of gasoline and in the amount of driving

by Michael Sivak, Sivak Applied Research.

One possible consequence of the recent jump in the price of gasoline in the United States might be a reduction in driving. This post briefly outlines the complexity of this issue and presents some recent data.

I must emphasize up front that no attempt will be made to offer any causal conclusions. This is the case because many other variables influence the amount of driving. The main such variables are currently the course of the pandemic, and our complex personal and societal reactions to it (e.g., changes in telecommuting and online shopping).

The pandemic clearly contributed to a crash of all major modes of transportation, with driving (by all vehicles on all roads) bottoming out with a reduction of 40% in April 2020 compared with pre-pandemic April 2019. However, it is not clear how the recent pandemic’s ups (in early 2022) and downs (during the last few weeks) interacted with distance driven. For example, it is possible that the jump in the gas price pulled the amount of driving down, while the decline in the pandemic pushed it up.

Consequently, instead of drawing any causal inferences, the data to be presented are offered as food for thought.

One set of data of interest in this post is the weekly amount of driving by passenger vehicles on interstate highways. This set comes from a unique FHWA database that is being updated with a delay of only 3 days. Below I will present the data for each of the first 11 weeks of 2022, with each covering Monday through Sunday. Importantly, FHWA lists the percentage changes in the weekly amounts of driving compared with the corresponding week in 2019 (the last year before the pandemic).

The other data set to be presented in the table below involves the corresponding changes in the price of gasoline. This was calculated for each of the same 11 weeks of 2022, by comparing the prices in 2022 and 2019 at the midpoint of each week in the FHWA set above—Thursdays. The raw data (the average daily national prices for regular gasoline) were kindly provided by GasBuddy.

Week No.

Dates

Changes compared with the same week of 2019 (%)

Price of gasoline Amount of driving
1 1/3-1/9, 2022 +47 -4
2 1/10-1/16, 2022 +47 -2
3 1/17-1/23, 2022 +48 -9
4 1/24-1/30, 2202 +47 -3
5 1/31-2/6, 2022 +52 -8
6 2/7-2/13, 2022 +51 -3
7 2/14-2/20, 2022 +52 -1
8 2/21-2/27, 2022 +49 -3
9 2/28-3/6, 2022 +55 -4
10 3/7-3/13, 2022 +76 -10
11 3/14-3/20, 2022 +69 -7


Michael Sivak is the managing director of Sivak Applied Research and the former director of Sustainable Worldwide Transportation at the University of Michigan.

Comments

Todd Litman

Thanks Michael! That is useful information.

Your data suggests a relatively low short-run elasticity of fuel consumption with respect to price, but these impacts tend to increase significantly over time as travellers are able to adjust their travel patterns and vehicle purchases.

There is considerable research on this subject. For more information see:

Lutz Kilian and Xiaoqing Zhou (2020), Gasoline Demand More Responsive to Price Changes than Economists Once Thought, Federal Reserve Bank of Dallas (www.dallasfed.org); at www.dallasfed.org/research/economics/2020/0616.

Laurence Levin, Matthew S. Lewis and Frank A. Wolak (2017), “High Frequency Evidence on the Demand for Gasoline,” American Economic Journal: Economic Policy, Vo. 9 (3), pp. 314-47 (DOI: 10.1257/pol.20140093); at https://www.aeaweb.org/articles?id=10.1257/pol.20140093.

Todd Litman (2013), “Changing North American Vehicle-Travel Price Sensitivities: Implications for Transport and Energy Policy,” Transport Policy, Vol. 28, July, pp. 2-10 (www.sciencedirect.com/science/article/pii/S0967070X12000947); at www.vtpi.org/VMT_Elasticities.pdf.

Todd Litman (2021), Transportation Elasticities: How Prices and Other Factors Affect Travel Behavior, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/elasticities.pdf.

Mark Wardman (2022), “Meta-analysis of Price Elasticities of Travel Demand in Great Britain: Update and Extension,” Transportation Research Part A, Vo. 158, pp. 1-18 (doi.org/10.1016/j.tra.2022.01.020).

Lad

One way to escape all this capitalistic greed and price manipulation is not to depend on companies for energy, i.e., install your own solar and buy an EV. That cuts the oil and electricity bandits right out of the mix.

Herman

I see things a little differently as I own very fuel efficient 47 to 40 mpg cars. That's why I can also accept a liter price of $2, albeit unwillingly because of price gouging.
But as they always say, everyone has to know for themselves what they drive and how much money they want and can spend on fuel or electricity!
In Europe, 1 kWh of electricity already costs €0.50. That is very expensive and a BEV is not necessarily cheaper!

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