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How does fuel demand respond to price changes? Quasi-experimental evidence based on high-frequency data

Author

Listed:
  • M. ADAM

    (Insee)

  • O. BONNET

    (Insee)

  • E. FIZE

    (Conseil d Analyse conomique)

  • T. LOISEL

    (Insee, Crest)

  • M. RAULT

    (Conseil d'Analyse Economique.)

  • L. WILNER

    (Insee, Crest)

Abstract

This article exploits quasi-natural experiments provided by both the 2022 crude oil price surge consecutive to the Russo-Ukrainian war and fuel excise tax cuts in France to infer the price sensitivity of fuel demand. The granularity of bank account data available at the transaction level permits to shed new insights on how to properly disentangle anticipation effects from price effects. After controlling for anticipatory behavior, we obtain a price-elasticity comprised between -0.4 and -0.21. The average elasticity exhibits sizeable dispersion with respect to fuel spending, but varies little with income and location. Counterfactual simulations enable us to assess both financial and distributive impacts of the tax policy at stake as well as its effect on CO2 emissions.

Suggested Citation

  • M. Adam & O. Bonnet & E. Fize & T. Loisel & M. Rault & L. Wilner, 2023. "How does fuel demand respond to price changes? Quasi-experimental evidence based on high-frequency data," Documents de Travail de l'Insee - INSEE Working Papers 2023-17, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:2023-17
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Fuel demand ; price elasticity ; excise tax changes ; anticipatory behavior ; transaction-level data.;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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