THE STUDY MARCH 30, 2011
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Speaking at Georgetown University today, President Obama warned that thanks to rising demand from developing countries like India and China, the long-term trend of gas prices would be upward. “This is something that everybody is affected by,” he warned. But America has faced energy crises before, and by one important measure, it appears we are less willing or able to respond to higher gas prices.
According to research by UC Davis's Jonathan Hughes, Christopher Knittel and Daniel Sperling, Americans are now less responsive to increases in gas prices. In the late 1970s, a ten percent rise in the cost of gas would lead to about a three percent decline in the amount of gas consumed. In the early 2000s, on the other hand, gas prices would have to rise about 60 percent to provoke a similar decline in gas consumption. The researchers theorized that this might be because spending on gas is now a smaller fraction of total monthly income or because cars get better mileage now, meaning that cutting back on driving saves less gas than it would have in the 1970s. But either way, their research suggests that even if gas prices go higher, we’re unlikely to see Americans buying substantially less gas.
For more interesting research on what's in the news, check out The Study
(Post edited to clarify last sentence. Americans will still reduce their gas consumption, but not by nearly as much as they would have in the 70s.-AH)
4 comments
I question your negative assessment of the efficacy of increased gas taxes. It takes time for people to change their driving behavior, whether that entails moving closer to work and shopping or buying the next (more energy-efficient) car. Money-strapped governments may end up increasing the cost of driving anyway by raising highway tolls, placing tolls on hitherto free roads, more vigorously enforcing traffic regulations such as speed limits. The mass motoring way of life waxed for about 100 years, but is now in decline. Most Americans are poorer today. Energy costs are going up. We have exhausted ourselves in foreign wars to secure cheap, abundant overseas oil supplies. The pricing mechanism is a better way to encourage energy conservation than administrative fiats that can never keep up with circumstances.
- amidut
March 30, 2011 at 10:14pm
"We aren't going to stop buying gas". No shit? Where I live the average income is $14,600, and gas costs about $6 a gallon. People are driving more all the time, creating monster traffic jams, parking disasters, and all the rest. We love to drive, no?
- Robert Powell
March 31, 2011 at 11:22am
amidut, the problem with you prescription that people "move(ing) closer to work and shopping or buy(ing) the next (more energy-efficient) car" is that most of us no longer have the ability to do so since our homes are underwater, our savings are dpleted and our retirement accounts are now depleted because of the bank meltdown. While I agree generally with raising gas taxes to fund alternatives and changes in behavior, I also think the timing is terrible for asking more of the working class. It would only create even more anger, resentment and political wackadoodle politicians and voters.
- desertdog
March 31, 2011 at 1:24pm
That's Poland, right Robert? Anyone living outside the States has a unique insight into how much people will pay and continue to pay for petrol. It costs me €100 to fill my tank, and I drive a standard 1.6 litre Ford Mondeo. It hit the 100 last week.
- IggyPop
March 31, 2011 at 5:54pm