The Declining Price Elasticity of Gas

[phantom power]

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.

http://www.tnr.com/blog/the-study/86044/americans-arent-going-stop-buying-gas

http://www.tnr.com/blogs/the-study

[villager]

1. oh I think we'll be testing that theory soon enough..

...though I grant you, there's been generally bovine acceptance of the return to $4.00 a gallon...

[phantom power]

2. Atrios made an interesting comment on his blog, about duration.

the most recent $4 gas spike didn't last an especially long time. People treated it as a temporary thing to ride out. If the price of fuel moves into the $4-5 range and stays there, then I think we will see a phase change where people internalize this as the new normal, and begin adjusting their lifetstyles around it.

[villager]

good point -- hopefully, the adjustments will be anti-consumerist ones!

as opposed to further scrambling to keep pleasing -- and "fueling" -- our corporate overlords!

[villager]

3. flattered that DU's bots liked my post so much they repeated it...

...but really, it's just an accidental dupe (sly commentary on much of the body politic itself!?)