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Refining the evidence: British Columbias carbon tax and household gasoline consumption

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  • Chad Lawley and Vincent Thivierge

Abstract

The impact of carbon prices on consumer behavior is a central element in current policy debates dealing with mitigation of greenhouse gas emissions. We examine the impact of British Columbia's carbon tax on private automobile gasoline use. We control for several factors that influenced gasoline demand during our study period, including local public transit improvements and increased cross-border shopping. Our results suggest that a 5 cent per litre carbon tax reduced gasoline consumption by 8%. We find that households residing in Vancouver and other cities responded to the carbon tax, whereas households in small towns and rural areas did not respond. We perform several sensitivity analyses. Even our most conservative lower bound estimate suggests that a 5 cent per litre carbon tax reduced gasoline consumption by 5%.

Suggested Citation

  • Chad Lawley and Vincent Thivierge, 2018. "Refining the evidence: British Columbias carbon tax and household gasoline consumption," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    • Handle: RePEc:aen:journl:ej39-2-lawley
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    Cited by:

    1. Ott, Laurent & Weber, Sylvain, 2022. "How effective is carbon taxation on residential heating demand? A household-level analysis," Energy Policy, Elsevier, vol. 160(C).
    2. Ryan Rafaty & Geoffroy Dolphin & Felix Pretis, 2020. "Carbon pricing and the elasticity of CO2 emissions," Working Papers EPRG2035, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Brandon Schaufele & Jennifer Winter, 2023. "Production Controls in Heavy Oil and Bitumen Markets: Surplus Transfer Due to Alberta’s Curtailment Policy," Energies, MDPI, vol. 16(3), pages 1-24, January.
    4. Johan Lilliestam & Anthony Patt & Germán Bersalli, 2021. "The effect of carbon pricing on technological change for full energy decarbonization: A review of empirical ex‐post evidence," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 12(1), January.
    5. Harju, Jarkko & Kosonen, Tuomas & Laukkanen, Marita & Palanne, Kimmo, 2022. "The heterogeneous incidence of fuel carbon taxes: Evidence from station-level data," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    6. Joel Wood, 2018. "The Pros and Cons of Carbon Taxes and Cap-and-Trade Systems," SPP Briefing Papers, The School of Public Policy, University of Calgary, vol. 11(30), November.
    7. Erutku, Can, 2019. "Carbon pricing pass-through: Evidence from Ontario and Quebec's wholesale gasoline markets," Energy Policy, Elsevier, vol. 132(C), pages 106-112.
    8. Jia, Zhijie & Lin, Boqiang & Liu, Xiying, 2023. "Rethinking the equity and efficiency of carbon tax: A novel perspective," Applied Energy, Elsevier, vol. 346(C).
    9. Sileci, Lorenzo, 2023. "Carbon pricing with regressive co-benefits: evidence from British Columbia’s carbon tax," LSE Research Online Documents on Economics 121047, London School of Economics and Political Science, LSE Library.
    10. Bernard, Jean-Thomas & Kichian, Maral, 2019. "The long and short run effects of British Columbia's carbon tax on diesel demand," Energy Policy, Elsevier, vol. 131(C), pages 380-389.
    11. Rafaty, Ryan & Dolphin, Geoffroy & Pretis, Felix, 2021. "Carbon Pricing and the Elasticity of CO2 Emissions," RFF Working Paper Series 21-33, Resources for the Future.
    12. Xiang, Di & Lawley, Chad, 2019. "The impact of British Columbia's carbon tax on residential natural gas consumption," Energy Economics, Elsevier, vol. 80(C), pages 206-218.
    13. Boqiang Lin & Zhijie Jia, 2020. "Supply control vs. demand control: why is resource tax more effective than carbon tax in reducing emissions?," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-13, December.

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    JEL classification:

    • F0 - International Economics - - General

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