Via Todd Litman of the Victoria Transport Policy Institute, two interesting studies on how drivers have reacted to the rising cost of taking to the roads.
First up, a study (pdf link) that used 2.1 million odometer readings in California to explore the relationship between fuel prices and driving. From the abstract:
The primary empirical result is a medium-term estimate of the utilization elasticity of driving—the elasticity of vehicle-miles-traveled with respect to gasoline price—in the range of -0.15 to -0.20…Further analysis indicates that there is considerable heterogeneity in this elasticity, both geographically and across income and vehicle types.
In non-econ-speak, that means that every 10 percent increase in fuel costs decreased driving by about 2 percent.
But locale, vehicle type, and income all influenced drivers’ responses to high prices. In urban and suburban areas, the mileage logged in SUVs and pickups plummeted when gas prices went up—but the declines were less noticeable for smaller, more efficient cars. (This suggests, among other things, that folks with access to more than one vehicle tend to drive the more efficient one more when gas prices rise.) However, SUV and pickup drivers from low-income rural areas weren’t nearly as responsive to gas prices—perhaps because they have fewer kinds of vehicles to choose from, and less flexibility in how much they travel.
Second, there’s this study that found that drivers are much more responsive to permanent changes in gas prices (i.e., gas taxes) than to temporary ones (i.e., swings in market prices). From the article:
A one-dollar increase in tax-exclusive gasoline prices would increase the average mpg of new vehicles sold by only 3.6%, [but] the same increase in gasoline taxes would increase the average mpg of new vehicles by 47.7%.
Their results suggest that drivers shrug off market price swings, but pay close attention to taxes. Of course, the data that underpin these results came from 1999 to 2006—so it’s hard to know whether the recent spikes in gas prices over the last few years have changed things. Do drivers now think of high gas prices as more than a temporary blip? Maybe so, but this study can’t tell us.
Regardless, I can’t help wondering if other “permanent” increases in the cost of driving—such as the tolls that are currently being planned or proposed in various parts of the Northwest, or increases in parking costs—might also put the brakes on people’s driving habits.
Photo credit: Burnside, empty. / Gary A. K. / CC BY-NC-SA 2.0
John Niles
Price of driving goes up, amount of driving goes down. This is why road use fees with off-peak discounts come out in computer models so well as a traffic congestion buster. See the 2040 forecasts of the Puget Sound Regional Council’s T-2040 plan for an example. This is the first big city transportation plan published in America that has traffic congestion on expressways going down instead of up without building a lot of new roads. Buses—a more ubiquitous, far reaching form of transit than trains—then move better on the roads and pick up market share over trains. Sound Transit’s 2008 rail forecasts for 2030 got taken down by about half in PSRC’s modeling of the 2040 world of the future, even though all the planned miles of rail are assumed to be built.
Todd Litman
Yes, several recent studies indicate that travelers are likely to be more price sensitive in the future, due to various demographic and economic trends. That increases the effectiveness and benefits of pricing reforms, such as congestion pricing, efficient parking fees, and distance-based vehicle insurance.For more information see my report, “Changing Vehicle Travel Price Sensitivities: The Rebounding Rebound Effect,” (www.vtpi.org/VMT_Elasticities.pdf ).
Annie
Has anyone done a study showing the effect of rising gasoline prices on transit bus ridership? My experience is that when gasoline prices rise so do bus ticket prices and bus infrastructure costs. So buses end up being more expensive and in spite of the few new riders, bus service does not improve thanks to higher costs. So I would think that the average commuter does not switch from car to bus because it is still not worth it.I’m retired now, but the few times I was tempted to get out of my car and into a bus I found it awkward (multiple bus changes, crowded) and time consuming (on average, taking 1.5 – 2 times longer). Commuting distance was too far and too dangerous for me to bike (I tried it and found it not only time-consuming but stressful).Rising gasoline prices affect my discretionary driving, i.e. for vacations, entertainment and non-essential shopping, but they have had little effect on my essential driving, which for most people is probably the bulk of their driving.