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Interdependencies between transport fuel demand, efficiency and quality: An application to Austria

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  • Goerlich, Roland
  • Wirl, Franz

Abstract

This paper focuses on the interdependencies between technical efficiencies and energy demand which are often either treated in isolation or do not get the sufficient attention in the literature. More precisely, this paper uses technical efficiencies as one crucial determinant of energy demand in order to integrate at least two issues that are usually investigated separately from each other: the rebound effect resulting from improved technical efficiencies and the asymmetry of energy demand. In this regard, our paper sets out a theoretical framework which has the following implications: higher efficiency increases service demand (first order rebound), low fuel prices and higher efficiency increases the demand for quality (second order) which in turn increases service demand further (third order); ceteris paribus, energy price shocks should increase scrapping rates; fuel prices direct the R&D expenditures of car producers; those on engine efficiency are irreversible, which has the consequence that energy price elasticities depend on the history of energy prices rather than being asymmetrical. Derived implications are subsequently tested on Austrian data. In particular, the purchasing decision diesel versus gasoline powered cars allows to refute the myth that consumers apply high implicit rates for discounting the future benefit from efficient cars.

Suggested Citation

  • Goerlich, Roland & Wirl, Franz, 2012. "Interdependencies between transport fuel demand, efficiency and quality: An application to Austria," Energy Policy, Elsevier, vol. 41(C), pages 47-58.
    • Handle: RePEc:eee:enepol:v:41:y:2012:i:c:p:47-58
    DOI: 10.1016/j.enpol.2010.10.015
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    Cited by:

    1. Wirl, Franz, 2015. "White certificates — Energy efficiency programs under private information of consumers," Energy Economics, Elsevier, vol. 49(C), pages 507-515.
    2. Galvin, Ray, 2017. "How does speed affect the rebound effect in car travel? Conceptual issues explored in case study of 900 Formula 1 Grand Prix speed trials," Energy, Elsevier, vol. 128(C), pages 28-38.
    3. Hunt, Lester C. & Ryan, David L., 2015. "Economic modelling of energy services: Rectifying misspecified energy demand functions," Energy Economics, Elsevier, vol. 50(C), pages 273-285.
    4. Ajanovic, Amela & Schipper, Lee & Haas, Reinhard, 2012. "The impact of more efficient but larger new passenger cars on energy consumption in EU-15 countries," Energy, Elsevier, vol. 48(1), pages 346-355.
    5. Fuentes, Rolando & Sengupta, Abhijit, 2020. "Using insurance to manage reliability in the distributed electricity sector: Insights from an agent-based model," Energy Policy, Elsevier, vol. 139(C).
    6. Craglia, Matteo & Cullen, Jonathan, 2019. "Do technical improvements lead to real efficiency gains? Disaggregating changes in transport energy intensity," Energy Policy, Elsevier, vol. 134(C).
    7. Yahya F. Anouti & Carol A. Dahl, 2014. "Rationalizing Transport Fuels Pricing Policies and Effects on Global Fuel Consumption, Emissions, Government Revenues and Welfare," Working Papers 2014-01, Colorado School of Mines, Division of Economics and Business.
    8. Lester C Hunt & David L Ryan, 2014. "Catching on the Rebound: Why Price Elasticities are Generally Inappropriate Measures of Rebound Effects," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 148, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.

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