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Short-run fuel price responses: At the pump and on the road

Author

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  • Ritter, Nolan
  • Schmidt, Christoph M.
  • Vance, Colin

Abstract

We provide evidence that motorists respond to short-run fluctuations in fuel prices at the gas pump and not on the road. Employing variants of censored panel regression to control for censoring of the dependent variable, we find that the fuel price has a negative impact on the quantity of fuel purchased, but no consistently significant impact on the subsequent distance driven until the next refill. Over the short run, drivers thus appear to cope with high fuel prices by adjusting fuel purchases with each visit to the filling station, but without altering their daily mileage.

Suggested Citation

  • Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2016. "Short-run fuel price responses: At the pump and on the road," Energy Economics, Elsevier, vol. 58(C), pages 67-76.
    • Handle: RePEc:eee:eneeco:v:58:y:2016:i:c:p:67-76
    DOI: 10.1016/j.eneco.2016.06.013
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    References listed on IDEAS

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    Cited by:

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    2. Simora, Michael & Vance, Colin, 2017. "Travel mode and tour complexity: The roles of fuel price and built environment," Ruhr Economic Papers 711, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    Panel data; Driving behavior; Tanking behavior; Fuel price; Two-sided censoring;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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