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How effective are policies to reduce gasoline consumption? Evaluating a quasi-natural experiment in Spain

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Author Info

  • Javier Asensio

    ()
    (Universitat Autònoma de Barcelona & IEB)

  • Andrés Gómez-Lobo

    ()
    (University of Chile)

  • Anna Matas

    ()
    (Universitat Autònoma de Barcelona & IEB)

Abstract

Using a panel of 48 provinces for four years we empirically analyze a series of temporary policies aimed at curbing fuel consumption implemented in Spain between March and June 2011. The first policy was a reduction in the speed limit in highways. The second policy was an increase in the biofuel content of fuels used in the transport sector. The third measure was a reduction of 5% in commuting and regional train fares that resulted in two major metropolitan areas reducing their overall fare for public transit. The results indicate that the speed limit reduction in highways reduced gasoline consumption by between 2% and 3%, while an increase in the biofuel content of gasoline increased this consumption. This last result is consistent with experimental evidence that indicates that mileage per liter falls with an increase in the biofuel content in gasolines. As for the reduction in transit fares, we do not find a significant effect for this policy. However, in specifications including the urban transit fare for the major cities in each province the estimated cross-price elasticity of the demand for gasoline -used as a proxy for car use- with respect to the price of transit is within the range reported in the literature. This is important since one of the main efficiency justification for subsidizing public transit rests on the positive value of this parameter and most of the estimates reported in the literature are quite dated.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2013/9.

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Length: 35 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:ieb:wpaper:2013/6/doc2013-9

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Keywords: Fuel consumption; cross-elasticities; transport policies; biofuel;

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  1. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  2. Andrés Gómez-Lobo, 2007. "A new look at the incidence of public transport subsidies: a case study of Santiago, Chile," Working Papers wp253, University of Chile, Department of Economics.
  3. David M. Drukker, 2003. "Testing for serial correlation in linear panel-data models," Stata Journal, StataCorp LP, vol. 3(2), pages 168-177, June.
  4. Ian W.H. Parry & Kenneth A. Small, 2007. "Should Urban Transit Subsidies Be Reduced?," Working Papers 060723, University of California-Irvine, Department of Economics.
  5. Matías Piaggio & Vicent Alcántara Escolano & Emilio Padilla, 2012. "Economic structure and key sectors analysis of greenhouse gas emissions in Uruguay," Working Papers wpdea1204, Department of Applied Economics at Universitat Autonoma of Barcelona.
  6. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  7. Ana Matas, 1991. "La demanda de transporte urbano: un análisis de las elasticidades y valoraciones del tiempo," Investigaciones Economicas, Fundación SEPI, vol. 15(2), pages 249-267, May.
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