Download or read book The Consumer Response to Gasoline Price Changes written by Kenneth Thomas Gillingham and published by Stanford University. This book was released on 2011 with total page 298 pages. Available in PDF, EPUB and Kindle. Book excerpt: When gasoline prices rise, people notice: the news is filled with reports of pinched household budgets and politicians feeling pressure to do something to ameliorate the burden. Yet, raising the gasoline tax to internalize externalities is widely considered by economists to be among the most economic efficiency-improving policies we could implement in the transportation sector. This dissertation brings new evidence to bear on quantifying the responsiveness to changing gasoline prices, both on the intensive margin (i.e., how much to drive) and the extensive margin (i.e., what vehicles to buy). I assemble a unique and extremely rich vehicle-level dataset that includes all new vehicle registrations in California 2001 to 2009, and all of the mandatory smog check program odometer readings for 2002 to 2009. The full dataset exceeds 49 million observations. Using this dataset, I quantify the responsiveness to gasoline price changes on both margins, as well as the heterogeneity in the responsiveness. I develop a novel structural model of vehicle choice and subsequent utilization, where consumer decisions are modeled in a dynamic setting that explicitly accounts for selection on unobserved driving preference at both the time of purchase and the time of driving. This utility-consistent model allows for the analysis of the welfare implications to consumers and government of a variety of different policies, including gasoline taxes and feebates. I find that consumers are responsive to changing gasoline prices in both vehicle choice and driving decisions, with more responsiveness than in many recent studies in the literature. I estimate a medium-run (i.e., roughly two-year) elasticity of fuel economy with respect to the price of gasoline for new vehicles around 0.1 for California, a response that varies by whether the vehicle manufacturer faces a tightly binding fuel economy standard. I estimate a medium-run elasticity of driving with respect to the price of gasoline around -0.15 for new personal vehicles in the first six years. Older vehicles are driven much less, but tend to be more responsive, with an elasticity of roughly -0.3. I find that the vehicle-level responsiveness in driving to gasoline price changes varies by vehicle class, income, geographic, and demographic groups. I also find that not including controls for economic conditions and not accounting for selection into different types of new vehicles based on unobserved driving preference tend to bias the elasticity of driving away from zero -- implying a greater responsiveness than the true responsiveness. This is an important methodological point, for much of the literature estimating similar elasticities ignores these two issues. These results have significant policy implications for policies to reduce gasoline consumption and greenhouse gas emissions from transportation. The relatively inelastic estimated responsiveness on both margins suggests that a gasoline tax policy may not lead to dramatic reductions in carbon dioxide emissions, but is a relatively non-distortionary policy instrument to raise revenue. When the externalities of driving are considered, an increased gasoline tax may not only be relatively non-distortionary, but even economic efficiency-improving. However, I find that the welfare changes from an increased gasoline tax vary significantly across counties in California, an important consideration for the political feasibility of the policy. Finally, I find suggestive evidence that the ``rebound effect'' of a policy that works only on the extensive margin, such as a feebate or CAFE standards, may be closer to zero than the elasticity of driving with respect to the price of gasoline. This suggestive finding is particularly important for the analysis of the welfare effects of any policy that focuses entirely on the extensive margin.

Download or read book The Distributional Implications of the Impact of Fuel Price Increases on Inflation written by Mr. Kangni R Kpodar and published by International Monetary Fund. This book was released on 2021-11-12 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.

Download or read book The Response of Consumer Spending to Changes in Gasoline Prices written by Michael Gelman and published by . This book was released on 2016 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates how overall consumer spending responds to changes in gasoline prices. It uses the differential impact across consumers of the sudden, large drop in gasoline prices in 2014 for identification. This estimation strategy is implemented using comprehensive, daily transaction-level data for a large panel of individuals. The estimated marginal propensity to consume (MPC) is approximately one, a higher estimate than estimates found in less comprehensive or well-measured data. This estimate takes into account the elasticity of demand for gasoline and potential slow adjustment to changes in prices. The high MPC implies that changes in gasoline prices have large aggregate effects.

Download or read book Cost Effectiveness and Deployment of Fuel Economy Technologies for Light Duty Vehicles written by National Research Council and published by National Academies Press. This book was released on 2015-09-28 with total page 812 pages. Available in PDF, EPUB and Kindle. Book excerpt: The light-duty vehicle fleet is expected to undergo substantial technological changes over the next several decades. New powertrain designs, alternative fuels, advanced materials and significant changes to the vehicle body are being driven by increasingly stringent fuel economy and greenhouse gas emission standards. By the end of the next decade, cars and light-duty trucks will be more fuel efficient, weigh less, emit less air pollutants, have more safety features, and will be more expensive to purchase relative to current vehicles. Though the gasoline-powered spark ignition engine will continue to be the dominant powertrain configuration even through 2030, such vehicles will be equipped with advanced technologies, materials, electronics and controls, and aerodynamics. And by 2030, the deployment of alternative methods to propel and fuel vehicles and alternative modes of transportation, including autonomous vehicles, will be well underway. What are these new technologies - how will they work, and will some technologies be more effective than others? Written to inform The United States Department of Transportation's National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) emission standards, this new report from the National Research Council is a technical evaluation of costs, benefits, and implementation issues of fuel reduction technologies for next-generation light-duty vehicles. Cost, Effectiveness, and Deployment of Fuel Economy Technologies for Light-Duty Vehicles estimates the cost, potential efficiency improvements, and barriers to commercial deployment of technologies that might be employed from 2020 to 2030. This report describes these promising technologies and makes recommendations for their inclusion on the list of technologies applicable for the 2017-2025 CAFE standards.

Download or read book Gasoline price changes the dynamic of supply demand and competition written by and published by DIANE Publishing. This book was released on 2005 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Gasoline Taxes and Consumer Behavior written by Shanjun Li and published by . This book was released on 2012 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Gasoline taxes can be employed to correct externalities associated with automobile use, to reduce dependency on foreign oil, and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect consumer behavior as distinct from tax-exclusive gasoline prices. Our analysis shows that a 5-cent tax increase reduces gasoline consumption by 1.3 percent in the short-run, much larger than that from a 5-cent increase in the tax-exclusive gasoline price. This difference suggests that traditional analysis could significantly underestimate policy impacts of tax changes. We further investigate the differential effect from gasoline taxes and tax-exclusive gasoline prices on both the intensive and extensive margins of gasoline consumption. We discuss implications of our findings for the estimation of the implicit discount rate for vehicle purchases and for the fiscal benefits of raising taxes.

Download or read book Effects of Gasoline Prices on Driving Behavior and Vehicle Markets written by David Austin and published by Government Printing Office. This book was released on 2008 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Gasoline prices and driving behavior. Volume of traffic ; Speed of traffic ; Applicability of findings to other regions of the United States -- Gasoline prices and vehicle markets. Market shares for cars and light trucks ; Gasoline prices and vehicle market status ; Changes in new vehicle fuel economy and pricing ; Changes in the used vehicle market -- Study data -- Analytical approach and economic results.

Download or read book Fuel Excise Taxes and Consumer Gasoline Demand written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Interest in using gasoline taxes as a gasoline consumption reduction policy has increased. This study asks three questions to help determine how consumer gasoline consumption responds to gas tax increases. First, do consumers curtail consumption in response to a tax? Second, do consumers respond differently to price adjustments in the cost of gasoline due to taxes than they do to price adjustments due to market forces? Lastly, do consumers respond to gas tax increases differently depending upon how they are implemented? In response to these questions this study concludes that: (1) consumers do curtail consumption in response to gas tax increases, (2) do not respond to price increases due to taxes and market forces differently, and (3) do curtail consumption more in response to larger rate increases than smaller ones.

Download or read book The Influence of Gasoline Prices and Consideration Sets on the Fuel Economy of New Vehicle Sales written by James David Ruckdaschel and published by . This book was released on 2020 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding the factors that influence consumer investment in fuel economy when purchasing a new vehicle is critical for stakeholders including environmental policy makers, automotive manufacturers and oil companies. The energy economics literature shows that consumers are relatively rational in how much fuel economy they purchase in response to changes in gas price. Yet the marketing literature suggests that consumers only consider a small number of vehicle makes/models - as few as 2-6 - when making their purchase decision. Given this, we consider the extent to which consumer’s rational response to gas price changes is achieved by including different vehicles in their consideration set, versus choosing differently from within their consideration set. We analyze data from 210,885 responses to a new vehicle customer satisfaction survey collected over 9 years in which respondents state the vehicles they considered purchasing in addition to the vehicle they ultimately purchased. Our findings show that as gasoline prices rise, their purchased vehicle fuel economy increases more than their consideration set average fuel economy does, with both increasing. This is the result of considering more fuel-efficient vehicles and also purchasing higher within their consideration set fuel economy range. The degree to which the consumer adjusts is shown to correspond to the importance they place on the environment during their shopping process. Increased consideration and adoption of alternative fuel vehicles are found to be one mechanism the consumer uses to make these adjustments. Finally, we highlight how changing gasoline prices result in differing consideration set behavior for buyers of low and high fuel economy vehicles.

Download or read book Revisiting the Income Effect written by Dora Gicheva and published by . This book was released on 2007 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the importance of income effects in purchase decisions for every-day products by analyzing the effect of gasoline prices on grocery expenditures. Using detailed scanner data from a large grocery chain as well as data from the Consumer Expenditure Survey (CES), we show that consumers re-allocate their expenditures across and within food-consumption categories in order to offset necessary increases in gasoline expenditures when gasoline prices rise. We show that gasoline expenditures rise one-for-one with gasoline prices, consumers substitute away from food-away-from-home and towards groceries in order to partially offset their increased expenditures on gasoline, and that within grocery category, consumers substitute away from regular shelf-price products and towards promotional items in order to save money on overall grocery expenditures. On average, consumers are able to decrease the net price paid per grocery item by 5-11% in response to a 100% increase in gasoline prices. Our results show that consumers respond to permanent changes in income from gasoline prices by substituting towards lower-cost food at the grocery store and lower priced items within grocery category. The substitution away from full-priced items towards sale items has implications for microeconomic discrete-choice demand models as well as for macroeconomic inflation measures that typically do not incorporate frequently changing promotional prices.

Download or read book Gasoline Prices and Their Effects on Behavior written by Hermann Schreiber and published by Nova Science Pub Incorporated. This book was released on 2010-01-01 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past several years, gasoline prices have risen well above their historic average. In many parts of the United States, gasoline prices were above $3 per gallon for much of 2007. Although consumers in the past did not respond very much to small fluctuations in the price of gasoline, the recent large increases have led many people to make adjustments, for example, in the way they drive and in the kinds of vehicles they buy. This Congressional Budget Office (CBO) study, prepared at the request of the Ranking Member of the Senate Budget Committee, relates rising gasoline prices to changes in how fast people drive, the volume of highway traffic, and rail transit ridership. It also examines the effects on market shares, fuel economy, and pricing of cars and light trucks purchased over the past several years. With the world-wide price of oil continuing to rise, this book provides an indication of the kinds of adjustments consumers would make if gasoline prices continue to rise, and of the implications of rising gasoline prices for policies that would discourage gasoline consumption and thus limit the growth in carbon dioxide emissions. This book consists of public documents which have been located, gathered, combined, reformatted, and enhanced with a subject index, selectively edited and bound to provide easy access.

Download or read book Dynamic Fuel Price Pass Through written by Mr.Kangni R Kpodar and published by International Monetary Fund. This book was released on 2016-12-23 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the dynamic pass-through of crude oil price shocks to retail fuel prices using a novel database on monthly retail fuel prices for 162 countries. The impulse response functions suggest that on average, a one cent increase in crude oil prices per liter translates into a 1.2 cent increase in the retail gasoline price at peak level six months after the shock. However, the estimates vary significantly across country groups, ranging from about 0.5 cent in MENA countries to two cents in advanced economies. The results also show that positive oil price shocks have a larger impact than negative price shocks on the retail gasoline price. Finally, the paper underscores the importance of the new dataset in refining estimates of the fiscal cost of incomplete pass-through.

Download or read book Pain at the Pump written by Meghan R. Busse and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: The dramatic increase in gasoline prices from close to $1 in 1999 to $4 at their peak in 2008 made it much more expensive for consumers to operate an automobile. In this paper we investigate whether consumers have adjusted to gasoline price changes by altering what automobiles they purchase and what prices they pay. We investigate these effects in both new and used car markets. We find that a $1 increase in gasoline price changes the market shares of the most and least fuel-efficient quartiles of new cars by +20% and -24%, respectively. In contrast, the same gasoline price increase changes the market shares of the most and least fuel-efficient quartiles of used cars by only +3% and -7%, respectively. We find that changes in gasoline prices also change the relative prices of cars in the most fuel-efficient quartile and cars in the least fuel-efficient quartile: for new cars the relative price increase for fuel-efficient cars is $363 for a $1 increase in gas prices; for used cars it is $2839. Hence the adjustment of equilibrium market shares and prices in response to changes in usage cost varies dramatically between new and used markets. In the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. We argue that the difference in how gasoline costs affect new and used automobile markets can be explained by differences in the supply characteristics of new and used cars

Download or read book Price Changes in the Gasoline Market written by and published by DIANE Publishing. This book was released on 1999 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report examines a recurring question about gasoline markets: why, especially in times of high price volatility, do retail gasoline prices seem to rise quickly but fall back more slowly? Do gasoline prices actually rise faster than they fall, or does this just appear to be the case because people tend to pay more attention to prices when they`re rising? This question is more complex than it might appear to be initially, and it has been addressed by numerous analysts in government, academia and industry. The question is very important, because perceived problems with retail gasoline pricing have been used in arguments for government regulation of prices. The phenomenon of prices at different market levels tending to move differently relative to each other depending on direction is known as price asymmetry. This report summarizes the previous work on gasoline price asymmetry and provides a method for testing for asymmetry in a wide variety of situations. The major finding of this paper is that there is some amount of asymmetry and pattern asymmetry, especially at the retail level, in the Midwestern states that are the focus of the analysis. Nevertheless, both the amount asymmetry and pattern asymmetry are relatively small. In addition, much of the pattern asymmetry detected in this and previous studies could be a statistical artifact caused by the time lags between price changes at different points in the gasoline distribution system. In other words, retail gasoline prices do sometimes rise faster than they fall, but this is largely a lagged market response to an upward shock in the underlying wholesale gasoline or crude oil prices, followed by a return toward the previous baseline. After consistent time lags are factored out, most apparent asymmetry disappears.

Download or read book Price Elasticities of Demand for Motor Gasoline and Other Petroleum Products written by Terry H. Morlan and published by . This book was released on 1981 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research results for short-term and long-term petroleum elasticities are summarized, and existing Energy Information Administration (EIA) models of energy demand are used to develop estimates of price response for 1-, 3-, 5-, and 10-year intervals. In the short-run, elasticities reported for most petroleum products in most end-uses generally range from -.1 to -.4 although the numerous research estimates for gasoline demand elasticity are clustered in the more elastic range of -.1 to -.3. EIA models used in this analysis fall within these ranges and tend toward the higher (in absolute terms) end of the elasticity range. In transportation uses, for which most of the research has centered on gasoline, petroleum demand has been shown to be less responsive to price than the other sectors, with long-term gasoline estimates generally falling in the range of -.3 to -.9. In investigating the price sensitivity for periods up to 10 years using the EIA Demand Analysis System, petroleum product elasticities in all sectors are typically between -.4 and -.1. For automobile gasoline demand, the greatest proportion of the 10-year price response is manifested in increased cutbacks in travel. The model studies show that, given continued increases in the price of oil, the proportion of consumer budgets as well as industrial production costs allocated for petroleum products will increase; that petroleum prices will be volatile in instances of temporary oil shortages; and that market forces can achieve long-term conservation of petroleum, but at the cost of greater proportional increases in oil prices.

Download or read book Who is Exposed to Gas Prices written by Meghan R. Busse and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this paper, by contrast, we investigate how gasoline prices affect the automobile industry: manufacturers and dealerships. We estimate how changes in gasoline prices affect equilibrium prices and sales of both new and used vehicles of different fuel economies. We investigate the implications of these effects for individual auto manufacturers, taking into account differences in manufacturers' vehicle portfolios. We also investigate effects on manufacturers' affiliated dealership networks, including effects implied by the changes in used vehicle market outcomes.

Download or read book Reducing Gasoline Consumption written by Terry Dinan and published by Nova Biomedical Books. This book was released on 2003 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: Several Members of Congress and public interest groups have recently proposed policies that would reduce gasoline consumption in the United States. Such proposals stem primarily from a desire to enhance the nation's energy security and to decrease its emissions of carbon dioxide, a key greenhouse gas that affects the Earth's climate. This book compares three methods of reducing gasoline consumption: increasing the corporate average fuel economy (CAFE) standards that govern passenger vehicles, raising the federal tax on gasoline, and setting a limit on carbon emissions from gasoline combustion and requiring gasoline producers to hold allowances for those emissions (a policy known as a cap-and-trade program). Also, the book weighs the relative merits of those policies against several major criteria: whether they would minimise costs to producers and consumers; how reliably they would achieve a given reduction in gasoline use; their implications for automobile safety; and their effects on such factors as traffic congestion, requirements for highway construction, and emissions of air pollutants other than carbon dioxide. In addition, the book examines two more policy implications that lawmakers may be concerned about: the impact on people at different income levels and in different regions, and the effects on federal revenue.